EDUCATIONAL VOUCHERS AND CREAM SKIMMING*

Epple and Romano (1998) show equilibrium provision of education by public and private schools has the latter skim off the wealthiest and most‐able students, and universal vouchers lead to further cream skimming. Here we study voucher design that injects private‐school competition and increases technical efficiencies without cream skimming. Conditioning vouchers on student ability without restriction on participating schools' policies fails to affect significantly cream skimming. However, by adding restrictions like tuition constraints, such vouchers can reap the benefits of school competition without increased stratification. This is accomplished while allowing voluntary participation in the voucher system and without tax increases.     

Erratum to “Competition,incentives, and public school productivity”

When competition increases, it is often presumed that public schools will be forced to become more efficient. This paper challenges that presumption, showing that in well-defined circumstances, rent-seeking public schools find it optimal to reduce productivity when a voucher is introduced. This occurs for incentive reasons alone. More generally, the productivity effects of vouchers are shown to be non-uniform, varying systematically according to household and community characteristics and the form the voucher takes; when the voucher is targeted, perverse productivity outcomes do not arise. The analysis has relevance to the policy issue of voucher design.     

Why do education vouchers fail at the ballot box?

We compare a uniform voucher regime against the status quo mix of public and private education, focusing on the distribution of welfare gains and losses across households by income. We argue that the topping-up option available under uniform vouchers is not sufficiently valuable for the poorer households, so the voucher regime is defeated at the polls. Our result is robust to partial voter turnout and efficiency differences between public and private schools, but depends critically on the opting-out feature in the current system.     

Child care voucher and labour market behaviour: experimental evidence from Finland

This article provides experimental estimates of the impact of a voucher for private care on labour force participation and use of private and public child care within the Nordic system of universal provision of public care. In a market that was providing high-quality, low-cost public child care, a voucher is nevertheless found to have a significant, positive effect for the use of private child care with zero effects on either use of public care or labour force participation. The use of private increased by five percentage points in the whole country and by five to seven percentage points in areas that suffer from excess demand for child care as a result of the introduction of the private child care voucher.     

The Headmaster Ritual: The Importance of Management for School Outcomes

We estimate the impact of individual principals on school outcomes by using panel data that allow us to track principals over time. We find that individual principals have a substantive impact on school policies, working conditions, and student outcomes. In particular, students who attend a school that has a one standard deviation better principal improve their achievement by between 0.05 and 0.1 standard deviations. Despite rich background information on principals, it is difficult to characterize successful management, suggesting that innate skills are central. We find that the scope for discretion is larger among voucher schools and in areas with school competition.     

The Efficacy of Choice Threats Within School Accountability Systems: Results from Legislatively Induced Experiments

Targeted stigma and school voucher threats under a revised 2002 Florida accountability law have positive impacts on school performance as measured by the test score gains of their students. In contrast, stigma and public school choice threats under the US federal accountability law, No Child Left Behind, do not have similar effects in Florida. Estimation relies upon individual-level data and is based upon regression analyses that exploit discontinuities within the accountability regimes. Choice threats embedded within accountability regimes can moderate educational inequalities by boosting achievement at the lowest-performing schools, but policy design is crucial.     

PRIVATE EDUCATION IN INDIA: A NOVEL TEST OF CREAM SKIMMING

Students in private schools routinely outperform those in public schools both in the United States and around the world. But do private schools make students better or do they simply cream skim better students? In this article I take advantage of the remarkable fact that in many districts in India a majority of students attend private schools. As the private share of school enrollment increases, cream skimming becomes less plausible as the explanation for a higher rate of achievement in private schools. Evidence for cream skimming is found when the private share of schooling is low, in the range of 0–15%, and thus private schools have a large public pool from which to skim. But the private effect on achievement does not appear to diminish greatly even in districts where more than 70% of students are in private schools. Most importantly, mean scores taken over the entire population of students, private and public, increase with the share of private schooling. These findings support a significant productivity effect of private schools. (JEL I25, I2, L33)     

SCHOOL DISCIPLINE: A SOURCE OR SALVE FOR THE RACIAL ACHIEVEMENT GAP?*

Racial disparities in school discipline are believed to contribute to the persistent achievement gap between black and white students. In this article, I estimate the relationship between school discipline and achievement within a structural model, taking into account the spillover effects of disruptive behavior. I find that discipline has an overall positive influence on student performance and that the racial gap in discipline stemming from cross‐school variation in discipline policies is consistent with achievement maximization. Integrating schools can close both the discipline and achievement gaps; however, overall achievement is reduced since schools are less able to target their discipline policies.     

The effects of generalized school choice on achievement and stratification: Evidence from Chile's voucher program

In 1981, Chile introduced nationwide school choice by providing vouchers to any student wishing to attend private school. As a result, more than 1000 private schools entered the market, and the private enrollment rate increased by 20 percentage points, with greater impacts in larger, more urban, and wealthier communities. We use this differential impact to measure the effects of unrestricted choice on educational outcomes. Using panel data for about 150 municipalities, we find no evidence that choice improved average educational outcomes as measured by test scores, repetition rates, and years of schooling. However, we find evidence that the voucher program led to increased sorting, as the “best” public school students left for the private sector.     

Student demographics,school working conditions,and teacher mobility

I analyse how the inclusion of working condition data influences the estimated marginal effects of student demographics on teacher mobility. Using detailed administrative data on public schools, combined with unique data describing teachers’ perceptions of working conditions, I estimate a model characterizing the multinomial outcomes of teachers choosing to work at different schools. By comparing the estimated marginal effects of student characteristics with and without incorporating detailed working conditions, I find that excluding these additional data results in overestimating the effect of student characteristics on the probability a teacher moves to a different school, but has no influence on estimated effects for the probability of leaving teaching altogether.     

Inequality and media capture

Popular support of redistributive policies depends on information they have about the tax system and efficiency of public projects. Mass media provides a convenient means for manipulating public opinion, even when voters understand that the media can be biased. I develop a theory of media capture in which the rich can influence information published in a media outlet at a cost. The model shows that higher inequality is associated with lower media freedom; this effect is stronger in democratic regimes. I find empirical support for the model in both panel data and cross-country analysis.     

HIGH SCHOOLS AND STUDENTS' INITIAL COLLEGES AND MAJORS

We use statewide administrative data from Missouri to examine the explanatory power of high schools over student sorting to colleges and majors at 4‐year public universities. We develop a “preparation and persistence index” (PPI) for each university‐by‐major cell in the Missouri system that captures dimensions of selectivity and rigor and allows for a detailed investigation of sorting. Our analysis shows that students' high schools predict the quality of the initial university, as measured by PPI, conditional on their own academic preparation, and that students from lower–socioeconomic status high schools systematically enroll at lower‐PPI universities. However, high schools offer little explanatory power over major placements within universities. (JEL I2, J1)     

Detracking Swedish compulsory schools: any losers, any winners?

In this article, I use within-school variation to estimate the effect of tracking. I exploit the fact not only that different tracking policies were practiced simultaneously in Swedish compulsory schools but also that tracking policies changed overtime within schools. I estimate not only if being in a tracked math environment had any effect on the probability of graduating from high school but also if tracking status had any impact on the math grade in high school. The results show that there are no significant average effects of tracking. However, there are effects in the lower part of the grade distribution. Students with a low-educated family background are more likely to fail math at high school if they have attended a compulsory school that practiced tracking compared to similar students in a non-tracked environment.     

Taxation of International Private Capital Flows and Securities Transactions in Developing Countries: Do Public Finance Considerations Augment the Macroeconomic Dividends?

This paper examines policies to tax international private capital flows and securities transactions in developing countries. Many recent studies focus on the macroeconomic dividends associated with these policies (namely, their contribution to macroeconomic and financial stability and lengthened investor time horizons). In this paper I explore whether the potential of these policies to raise much‐needed tax revenues in developing countries augments their well‐known macroeconomic benefits. To my knowledge, there has been no effort to examine systematically the public finance issues related to the taxation of international private capital flows or securities transactions in the developing country context. I conclude that the public finance implications of these policies in middle‐income developing countries offers additional support to the macroeconomic case for them. To different degrees, taxation of international private capital flows and securities transactions has the potential to raise modest revenues in middle‐income countries. However, far more important is the potential of these policies to offer valuable macroeconomic dividends on the national level. These national macroeconomic dividends have the potential to bear fruit globally. This is because experiences with financial contagion over the last decade suggest that global financial stability can be enhanced via the promotion of domestic financial stability in developing countries.     

Educational systems,growth and income distribution: a quantitative study

This study sets out to develop a dynamic model within an economy characterized by the coexistence of public and private schools, under imperfect credit market conditions, in an attempt to provide a clearer understanding of the evolution of economic growth and income inequality. We find that any government wishing to reduce income inequality should adopt policies aimed at increasing the enrollment rate in public schools. However, whilst high enrollment rates can be sustained in private schools, and thus create enhanced economic growth, this can only occur if accompanied by the liberalization of the credit markets.     

Market, civic virtues, and civic bargaining in the medieval and early modern age: some evidence from sixteenth century Italy

In the last decades, historians have shown that the modern market is rooted in the institutional system created in European towns since the middle ages. This approach leads us beyond the usual opposition between market and society or between public and private market. Indeed, in the medieval and early modern age, the market was part of a wider institutional design of civil life, which had a basic conceptual frame of reference in the notion of the common good, a feature typical of such organicistic and hierarchical societies. This paper explores the process of market construction in the medieval and early modern age. I firstly analysed the role of the market in these societies and then focused on the case of foodstuff provision: a key element of the non-written, ancient pact between rulers and people, based on the assurance of subsistence. As a basis for the study, I employed sixteenth century documents regarding Vicenza, a medium-sized town in the Republic of Venice. These show very clearly that, in general, market and price regulation was not the result of arbitrary interventions by public authorities; on the contrary, it was the result of a process of negotiation, which I call civic bargaining. This process involved??to various degrees??public authorities, landowners, merchants and guilds, and the town??s people, the pursuit of the common good being, in practice, a matter of balancing various needs and interests. Present-day economic and social public policies are, in many aspects, an inheritance of the institutional system created in the medieval and early modern age: knowledge of these origins is useful in the present debate regarding economic versus social development, as discussed at the end of the paper.     

The melting pot and school choice

In the United States, parents are offered free public education in the mainstream culture but must pay the full cost of tuition if they educate their children privately. This creates strong economic incentives for remaining within the public system, which promotes the assimilation of minorities. A Pareto improvement can be achieved by subsidizing private education in exchange for modifying its social content so as to reduce polarization. Popular opposition to voucher programs that facilitate school choice without regulating cultural content may partly reflect voters' concerns that such programs threaten to erode the common ground created by public education.     

Competition and educational quality: evidence from the Netherlands

Little evidence is available for the effect of competition on educational quality as only a few countries allow large-scale competition. In the Netherlands, free parental choice has been present since the beginning of the twentieth century and can be characterized as a full voucher program with 100 % funding. Based on micro panel data for the Netherlands, we show that there is a relation between competition and educational outcomes in secondary education, but that it is often negative and small, sometimes insignificant but never positive. This effect is larger for small and medium-sized schools and for schools that do not have a Protestant or Catholic denomination.     

Political preferences and public sector outsourcing

Given the intensive and ideologically charged debate over the use of private contractors for publicly funded services, it is somewhat surprising that many social scientists have preferred to explain government outsourcing by the pursuit of economic efficiency. Starting out from different theories, we investigate political explanations of government outsourcing using a Swedish data set in which outsourcing varies between municipalities and over time, as well as between services. Our identification strategy focuses on two services with similar contracting problems and local market conditions: preschools and primary schools. We study a period in which Swedish municipalities had full discretion in the provision of preschools, while their influence on the private provision of primary education was limited by a national voucher system. The comparison of preschools with primary schools in a difference-in-differences model suggests that the political color of the ruling majority influences outsourcing, which is consistent with the Citizen Candidate model of representative democracy.     

Competition Among Italian Junior‐Secondary Schools: A Variance‐Decomposition Empirical Analysis

The public economic theory emphasizes the potential role of competition in fostering the performance of educational systems. The rationale for pro‐competitive policies in education (i.e. vouchers, charter schools, tax deductions) is that schools can improve their quality responding to ‘pressures’ from nearby competitors. The objective of this paper is to analyze the potential relationship between (i) competition among schools and (ii) students’ achievement in Italy. While previous studies used OECD‐Pisa data for this purpose, here a new dataset about Italian schools has been employed: about 19,000 students in 150 schools constitute the sample. The reference framework is the idea that the presence of more schools in a certain area, and/or the proportion of students enrolled in private schools, should raise the performance of schools operating in that area through a ‘competition effect’. A multilevel strategy, which allows separating between‐areas variance in achievement scores, is employed. The findings support the view that competition has an impact, albeit little, on students’ achievement, and such competitive pressure is due to the number of schools, no matter if public or private.