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When does Inter-School Competition Matter? Evidence from the Chilean Voucher System
Francisco Gallego
The B.E. Journal of Economic Analysis and Policy, Advances. Volume 13, Issue 2, Pages 525–562
1935-1682
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 tests scores by just around 0.10 standard deviations; and 2) the effects are significantly bigger for public schools facing more binding minimum enrollment levels.

Clasificación JEL: I20, I21, I22, I28, H75
Palabras Claves: School choice, Chile, vouchers, soft budget constrains
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View this article at the publisher's website: De Gruyter
 
 
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