Purchasing seats in school choice and inequality

Tong Wang and Congyi Zhou

Quantitative Economics, 2024, vol. 15, issue 4, 1151-1195

Abstract: We study a mechanism that gives students the option of paying higher tuition to attend their preferred schools. This seat‐purchasing mechanism is neither strategyproof nor stable. Our paper combines administrative and survey data to estimate students' preferences and conducts welfare analysis. We find that changing from a deferred acceptance mechanism to the cadet‐optimal stable mechanism reduces students' welfare but that adopting the observed seat‐purchasing mechanism alleviates this welfare loss. Moreover, students from affluent communities prefer to pay higher tuition to stay at preferred schools, while those from less affluent communities are more likely be priced out to lower‐quality schools.

Date: 2024
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https://doi.org/10.3982/QE2220

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Persistent link: https://EconPapers.repec.org/RePEc:wly:quante:v:15:y:2024:i:4:p:1151-1195

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