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Can Increasing Private School Participation and Monetary Loss in a Voucher Program Affect Public School Performance? Evidence from Milwaukee

  • Rajashri Chakrabarti

    (Harvard University)

The Milwaukee voucher program, as implemented in 1990, allowed only non- sectarian private schools to participate in the program. Following a Wisconsin Supreme Court ruling, the program saw a major shift and entered into its second phase, when religious private schools were allowed to participate for the first time in 1998. This led to more than a three-fold increase in the number of private schools and almost a four-fold increase in the number of choice students. Moreover, due to some changes in funding provisions, the revenue loss per student from vouchers increased in the second phase of the program. This paper analyzes, both theoretically and empirically, the impacts of these changes on public school performance in Milwaukee. It argues that voucher design matters and that the choice of parameters in a voucher program is crucial as far as impacts on public school incentives and performance are concerned. In the context of a theoretical model of public school and household behavior, the paper establishes that the policy changes will lead to an improvement of the public schools in the second phase of the program as compared to the first phase. Following Hoxby (2003a, 2003b) in treatment-control group classification, using data from 1987 to 2002, and a difference-in-differences estimation strategy in trends, the paper then shows that the theoretical prediction is validated empirically. This result is robust to alternative samples and specifications, and survive robustness checks including correcting for mean reversion.

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File URL: http://econwpa.repec.org/eps/pe/papers/0512/0512003.pdf
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Paper provided by EconWPA in its series Public Economics with number 0512003.

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Length: 63 pages
Date of creation: 02 Dec 2005
Date of revision:
Handle: RePEc:wpa:wuwppe:0512003
Note: Type of Document - pdf; pages: 63
Contact details of provider: Web page: http://econwpa.repec.org

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  1. Kenneth Chay & Patrick J. McEwan & Miguel Urquiola, 2003. "The Central Role of Noise in Evaluating Interventions that Use Test Scores to Rank Schools," Discussion Papers 0304-10, Columbia University, Department of Economics.
  2. Chang-Tai Hsieh & Miguel Urquiola, 2003. "When Schools Compete, How Do They Compete? An Assessment of Chile's Nationwide School Voucher Program," NBER Working Papers 10008, National Bureau of Economic Research, Inc.
  3. West, Martin R. & Peterson, Paul E., 2005. "The Efficacy of Choice Threats within School Accountability Systems: Results from Legislatively Induced Experiments," Working Paper Series rwp05-033, Harvard University, John F. Kennedy School of Government.
  4. Rajashri Chakrabarti, 2004. "Impact of Voucher Design on Public School Performance: Evidence from Florida and Milwaukee Voucher Programs," Econometric Society 2004 North American Summer Meetings 221, Econometric Society.
  5. Caroline M. Hoxby, 2002. "School Choice and School Productivity (or Could School Choice be a Tide that Lifts All Boats?)," NBER Working Papers 8873, National Bureau of Economic Research, Inc.
  6. Thomas J. Nechyba, 1996. "Public School Finance in a General Equilibrium Tiebout World: Equalization Programs, Peer Effects and Private School Vouchers," NBER Working Papers 5642, National Bureau of Economic Research, Inc.
  7. Nechyba, Thomas J., 2002. "Introducing School Choice into Multi-District Public School Systems," Working Papers 02-13, Duke University, Department of Economics.
  8. C. F. Manski, . "Educational choice (vouchers) and social mobility," Institute for Research on Poverty Discussion Papers 972-92, University of Wisconsin Institute for Research on Poverty.
  9. Epple, Dennis & Romano, Richard E, 1998. "Competition between Private and Public Schools, Vouchers, and Peer-Group Effects," American Economic Review, American Economic Association, vol. 88(1), pages 33-62, March.
  10. Rajashri Chakrabarti, 2005. "Can Increasing Private School Participation and Monetary Loss in a Voucher Program Affect Public School Performance? Evidence from Milwaukee," Public Economics 0512003, EconWPA.
  11. Thomas J. Nechyba, 2000. "Mobility, Targeting, and Private-School Vouchers," American Economic Review, American Economic Association, vol. 90(1), pages 130-146, March.
  12. Caroline Minter Hoxby, 2003. "School Choice and School Productivity. Could School Choice Be a Tide that Lifts All Boats?," NBER Chapters, in: The Economics of School Choice, pages 287-342 National Bureau of Economic Research, Inc.
  13. Dennis Epple & Richard Romano, 2002. "Educational Vouchers and Cream Skimming," NBER Working Papers 9354, National Bureau of Economic Research, Inc.
  14. Elizabeth M. Caucutt, 2002. "Educational Vouchers When There Are Peer Group Effects--Size Matters," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(1), pages 195-222, February.
  15. McMillan, Robert, 2004. "Competition, incentives, and public school productivity," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1871-1892, August.
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