The Demand for Effective Charter Schools

This paper studies the demand for charter schools in Boston, Massachusetts, with an emphasis on comparative advantage in school choice. I model charter school application and attendance decisions in a generalized Roy selection framework that links students’ preferences to the achievement gains generated by charter attendance. I estimate the model using instruments based on randomized admission lotteries and distance to charter schools. The estimates show that students do not sort into charter schools on the basis of comparative advantage in academic achievement. Charter schools generate larger test score gains for disadvantaged, low-achieving students, but demand for charters is stronger among richer students and high achievers. Similarly, achievement benefits are larger for students with weaker unobserved preferences for charter schools. As a result, counterfactual simulations indicate that charter expansion is likely to be most effective when accompanied by efforts to target students who are currently unlikely to apply.