Working Papers

<Now published in (2001) Journal of Urban Economics, 49 (2), 240-266>
We investigate how key school and community characteristics interact with the characteristics of individual students and families in determining the enrollment patterns in public and private schools. Using unique, nationally-representative, individual-level data, we find evidence that a number of factors plausibly influenced by public policy (e.g., school-district concentration, student-teacher ratios, and local violent crime rates) have powerful effects on the composition of public and private schools.

<Now published in NBER working paper 7990>
This paper examines the effects of private schooling on adolescent non-market behaviors. We control for differences between private and public school students by making use of the rich set of covariates available with our NELS micro-dataset. We also employ an instrumental-variables strategy that exploits variation across metropolitan areas in the costs that parents face in transporting their children to private schools, which stem from differences in the quality of the local transportation infrastructure. We find evidence to suggest that religious private schooling reduces teen sexual activity, arrests, and use of hard drugs (cocaine), but not drinking, smoking, gang involvement, or marijuana use.

<Now published in NBER working paper 8019>
Throughout the last decade, many states around the country have begun making public student test scores or other evaluative measures of school quality available to the general public. The most recent trends in state policies under consideration, already enacted in Florida and a major component of George W. Bush's education platform, involve the assignment of letter grades to rate school quality. Because school quality is one of a group of local public goods purchased along with a house, one would anticipate that additional information about school quality would capitalize into real estate values. This paper takes the first look at the role that this type of added information plays in the capitalization of school quality measures. We use rich student test score and housing value data from a Florida school district, one of the nation's 200 largest, to directly investigate this link. Using data on repeated sales of properties before and after the assignment of school letter grades, we find significant evidence that arbitrary distinctions embedded in school report cards lead to major housing price effects.

<Now published in (2002) Journal of Education Finance, 28(2), 183-205>
As an applied discipline based on evidence and guided by economic principles, the ultimate aims of the Economics of Education should be to influence outside opinion and shape policy. In a major court case based heavily on the Economics of Education, we can see how this knowledge-base was interpreted by the New York Supreme Court on public school funding in Campaign for Fiscal Equity versus The State of New York (2001). In this highly-praised ruling, known as the DeGrasse decision, the Court drew heavily on research evidence, along with direct testimony from noted academic economists and educationalists. Yet the Court also challenged this evidence and testimony, on both empirical and methodological grounds. The ruling therefore reflects a considered ‘outside opinion’, and one made by an agency – the judiciary – with substantial influence both on policy and on the views of society at large. This article reviews the economic content of the ruling, i.e. what the courts think about the Economics of Education. We also consider whether the benefits of court-mediated policies exceed the costs, i.e. whether Economists should view the courts as a good way of influencing policy.

Despite the strategic importance of the private school sector to education policy reform, and a general belief in the superiority of private schools, there is very little evidence on the relative effects of such schooling over public schools. This paper reviews the current evidence in the US and the UK on the relationship between private school attendance and earnings. The effects of private schooling on future earnings are important for the equity and efficiency of education systems, arguably more so than any effects on test scores. Yet, the review uncovers only four studies of this relationship for the US, and eleven studies for the UK. These show a reasonably robust correlation between higher earnings and private schooling, but a summary of the private schooling earnings premium cannot be easily identified. The available evidence varies across estimation techniques, and probably fails to include the full set of direct and indirect effects of private schooling on earnings. However, from simulations of the earnings premium, we calculate the rate of return to investment in private schooling over public schooling. This rate of return - including the direct and indirect effects of private schooling - is modest, at around 3% for the US and 5% for the UK

This paper looks at innovation in school choice programs-appraising this presumed causal relationship between market mechanisms and innovation in two ways. First, the analysis reviews market-oriented school reforms in four systems (New Zealand, Chile, England and Wales, and North America), examining how competition and choice foster innovation in education. These systems include publicly funded and privately administered schools, schools run by corporations, newly autonomous established schools, and new schools created to be free of bureaucratic constraints in order to develop innovative practices. This review indicates that, despite widely held assumptions about the power of markets, hypothetical predictions about competition and choice are largely unfulfilled in practice. In fact, interventions by public bureaucracies have often succeeded in encouraging classroom innovations, while market mechanisms appear to contribute to standardization. Second, this paper engages in an interpretive exploration of the logic of markets-particularly as they are applied to education. Insofar as reformers refer to markets for consumer goods as appropriate models for education, this paper examines the logic of such markets, as well as the logic of quasi-markets in education. In fact, while competitive environments often serve as catalysts for innovative practices, competition and choice can also lead toward emulation and standardization-trends that are missed in simplistic portrayals of markets. A more complex view of markets indicates no simple, direct, or immediate causal relationship between the choice/competition dynamic and educational innovation-thereby problematizing easy assumptions about encouraging innovation in classrooms.

Post-compulsory lifetime learning has been the subject of substantial social, political and cultural investigation, but it has received little attention from economists. This is surprising because this sector operates in more market-like environments than schools; quality of provision is therefore anticipated to depend on the market structure. Using a large-scale survey of providers of lifetime learning, this paper relates the quality of provision to economic notions of competition, ownership and fee pricing. Across a range of proxies for education quality, we find that: (1) market forces are positively correlated to quality; (2) there are significant differences across ownership status, yet no ownership structure appears superior; and (3) direct tuition fee pricing is positively correlated with quality. The first result is anticipated, being consistent with the substantial extant evidence base. The second result is perhaps more surprising, although here the evidence base (and theory) is much less clear-cut. The third result is not only of particular interest, insofar as direct financing (and student voice) may be an important channel for quality improvements, but also novel, in having received little empirical inquiry.

Current educational reforms encompass increasing freedom of parental choice. As such, parental choice is seen as a stimulus for school improvement and quality control of schools. Giving parents more say in the choice of a school for their child is said to empower them and to enhance the role of market mechanism in the educational system. One of the central thoughts behind freedom of parental choice is that the quality of education will increase when the educational system has to act like a market, in which the principle of 'demand and supply' prevails and where competition becomes a major feature of the educational system. In this study, we will focus on the relative importance of several reasons for school choice of parents. Moreover, we will try to give insight in the way reasons for school choice are imbedded within cultural contexts. We will discuss differences within countries, as well as between countries. For this study, data are gathered regarding reasons for school choice of 244 Dutch and 244 Finnish parents. In this study, it is shown that people from both countries hold an emphasis of schools on social education as a leading reason for choosing a school and that an emphasis on achievements and religious values are seen as the least important reasons for choosing a school. Consequence of the results of this study might be that in marketing schools, more emphasis may be laid on social aspects of education and less, as is currently the case, on academic achievements. In conclusion, we state that research on reasons for school choice should pay more attention to social factors influencing school choice than to issues of academic achievements.

This paper reviews the research evidence on vouchers and considers the factors that make education vouchers a "live issue" in US education policy. These factors can be articulated in terms of Levin's (2000a) notions of freedom of choice, productive efficiency, equity and social cohesion. It is possible to construct a reasonable case for voucher reform based on economic principles, triangulated evidence, and the absence of a strong set of counter-arguments. However, it is equally plausible to reject this case after considering the principles, evidence and counter-arguments more closely. Moreover, voucher schemes are a trivial component of US schooling, with some ambivalence on both the Right and the Left, and no popular mandate. Hence, vouchers are not a "live issue": there is lots of discussion, but not much action. Nonetheless, voucher schemes are part of a general trend towards liberalization of supply and demand of education. This trend includes a range of policy initiatives, including greater competition, greater accountability, and more contract schooling. A new example of this trend is tuition tax credits: evaluating these credits may be even more complicated and politically charged than for voucher schemes.

This paper compares the development since the 1980s of privatization of education services in the US and the UK. In both countries Education Management Organizations have become institutionalized to some degree, with policy borrowing between the two countries and a common ideological predisposition toward market solutions. Despite this history, privatization remains small-scale and not especially lucrative to those entering the market. In the UK, the emphasis has been on Compulsory Competitive Tendering and the Private Finance Initiative: public sector structures to aid privatization within a governmental system. The result is privatization at 'glacial speed', with few opportunities for EMOs. In the US, it is the creation of capital markets and the roll-out of charter schooling which have sustained privatization - the activities of companies such as Edison and TesseracT are considered. Capital market growth and charter schooling represent much more general alternatives to public provision.

<Now published in (2002) Educational Evaluation and Policy Analysis, 24(2), 133-144>
One of the most contentious policy areas in the United States today is the expansion of school choice. While many dimensions of parental choice behavior have been analyzed, perhaps the most enduring questions center on the aspects of schools parents prefer and how these preferences will affect the socio-economic and racial composition of schools. Using Internet-based methodological tools, the authors study parental preferences revealed through information search patterns and compare these to the standard findings in the literature, which are based largely on telephone interviews. Based on this evidence the authors suggest that unfettered choice may lead to undesirable outcomes in the distribution of students, and it may also lead to reduced pressure on schools to improve academic performance. Updated Version: March 2002.

In the international discussion about enlargement of parental choice and private deliverance of education, the Dutch arrangement is quite often regarded as a 'unique' system. This paper discuss the features of this Dutch arrangement as a variation of comparable arrangements within European Union, wherein parents can make a real choice between comparable schools, mostly between public and state-funded private schools, without paying very high school fees. Parental choice of a school for their children was one of the most important political topics in the 19th century continen-tal European societies. These struggles had more or less comparable results, with public and religious-subsidized school sectors offering parents a choice between schools of the same curriculum and usually under comparable financial costs for the parents. Despite the increasing irrelevance of church and religion in the everyday life of most late 20th century European societies, the religious schools in these societies did not dwindle away, nor in the Netherlands or elsewhere in Europe.