When Does Inter-School Competition Matter? Evidence from the Chilean “Voucher” System

Francisco Gallego

The B.E. Journal of Economic Analysis & Policy, 2013, vol. 13, issue 2, 525-562

Abstract: I investigate the effects of voucher-school competition on educational outcomes. I test whether voucher-school competition (1) improves student outcomes and (2) has stronger effects when public schools face a hard-budget constraint. Since both voucher-school competition and the degree of hardness of the budget constraint for public schools are endogenous to public school quality, I exploit (i) the interaction of the number of Catholic priests in 1950 and the institution of the voucher system in Chile in 1981 as a potentially exogenous determinant of the supply of voucher schools and (ii) a particular feature of the electoral system that affects the identity of the mayors of different counties (who manage public schools) as a source of exogenous variation in the degree of hardness of the public schools’ budget constraints. Using this information, I find that (1) an increase of one standard deviation of the ratio of voucher-to-public schools increases test scores by just around 0.10 standard deviations; and (2) the effects are significantly bigger for public schools facing more binding minimum enrollment levels.

Keywords: Chile; vouchers; inter-school competition; soft budget constraints (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (13)

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DOI: 10.1515/bejeap-2012-0032

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