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What happens when separate and unequal school districts merge?

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  • Aue, Robert
  • Klein, Thilo
  • Ortega, Josué

Abstract

We study the welfare effects of school district consolidation, i.e. the integration of disjoint school districts into a centralised clearinghouse. We show theoretically that, in the worst-case scenario, district consolidation may unambiguously reduce students' welfare, even if the student-optimal stable matching is consistently chosen. However, on average all students experience expected welfare gains from district consolidation, particularly those who belong to smaller and over-demanded districts. Using data from the Hungarian secondary school assignment mechanism, we compute the actual welfare gains from district consolidation in Budapest and compare these to our theoretical predictions. We empirically document substantial welfare gains from district consolidation for students, equivalent to attending a school five kilometres closer to the students' home addresses. As an important building block of our empirical strategy, we describe a method to consistently estimate students' preferences over schools and vice versa that does not fully assume that students report their preferences truthfully in the student-proposing deferred acceptance algorithm.

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  • Aue, Robert & Klein, Thilo & Ortega, Josué, 2020. "What happens when separate and unequal school districts merge?," ZEW Discussion Papers 20-032, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:20032
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    Cited by:

    1. Ortega, Josué & Klein, Thilo, 2023. "The cost of strategy-proofness in school choice," Games and Economic Behavior, Elsevier, vol. 141(C), pages 515-528.
    2. Ortega, Josue & Klein, Thilo, 2022. "Improving efficiency and equality in school choice," ZEW Discussion Papers 22-046, ZEW - Leibniz Centre for European Economic Research.
    3. Schwartz, Jacob & Song, Kyungchul, 2024. "The law of large numbers for large stable matchings," Journal of Econometrics, Elsevier, vol. 241(1).
    4. Kondratev, Aleksei Y. & Nesterov, Alexander S., 2022. "Minimal envy and popular matchings," European Journal of Operational Research, Elsevier, vol. 296(3), pages 776-787.
    5. Adam Kapor & Mohit Karnani & Christopher Neilson, 2024. "Aftermarket Frictions and the Cost of Off-Platform Options in Centralized Assignment Mechanisms," Journal of Political Economy, University of Chicago Press, vol. 132(7), pages 2346-2395.
    6. Aue, Robert & Bach, Maximilian & Heigle, Julia & Klein, Thilo & Pfeiffer, Friedhelm & Zapp, Kristina, 2020. "The implication of school admission rules for segregation and educational inequality: Research report," ZEW Expertises, ZEW - Leibniz Centre for European Economic Research, number 223254.
    7. Gersbach, Hans & Haller, Hans, 2022. "Gainers and losers from market integration," Mathematical Social Sciences, Elsevier, vol. 116(C), pages 32-39.
    8. Nikhil Agarwal & Eric Budish, 2021. "Market Design," NBER Working Papers 29367, National Bureau of Economic Research, Inc.
    9. Rajnish Kunar & Kriti Manocha & Josue Ortega, 2020. "On the integration of Shapley-Scarf housing markets," Papers 2004.09075, arXiv.org, revised Jan 2022.
    10. YingHua He & Shruti Sinha & Xiaoting Sun, 2021. "Identification and Estimation in Many-to-one Two-sided Matching without Transfers," Papers 2104.02009, arXiv.org, revised Jul 2023.
    11. Christopher Neilson & Adam Kapor & Mohit Karnani, 2020. "Aftermarket Frictions and the Cost of Off-Platform Options in Centralized Assignment Mechanisms," Working Papers 635a, Princeton University, Department of Economics, Industrial Relations Section..
    12. Kumar, Rajnish & Manocha, Kriti & Ortega, Josué, 2022. "On the integration of Shapley–Scarf markets," Journal of Mathematical Economics, Elsevier, vol. 100(C).

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    More about this item

    Keywords

    school district consolidation; integration of matching markets; preference estimation without truth-telling;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education

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