vouchers public school response and the role of incentives evidence from florida i introduction the concern over public school performance in the last two decades has pushed public school reform to the forefront of policy debate in the united states school accountability and school choice and especially vouchers are among the most hotly debated instruments of public school reform understanding the behavior and response of public schools facing these initiatives is key to an effective policy design this paper takes an important step forward in that direction by analyzing public school behavior under the florida voucher program the florida voucher program known as the opportunity scholarship program is unique in that it embeds a voucher program within a school accountability system moreover the federal no child left behind nclb act is similar to and largely modeled after the florida program which makes the latter all the more interesting and relevant much of the literature studying the effect of voucher programs on public schools has looked at the effect on student and mean school scores in contrast this study tries to go inside the black box to investigate some of the ways in which schools facing the voucher program behaved in the first 3 years after the program 1 exploiting the institutional details of the florida program during this period it analyzes the incentives built into the system and investigates public school behavior and response facing these incentives the florida voucher program written into law in june 1999 made all students of a school eligible for vouchers to move to private or higher performing public schools if the school got two f grades in a period of 4 years thus the program can be looked upon as a threat of voucher program schools getting an f grade for the first time were directly threatened by vouchers but vouchers were implemented only if they got another f grade in the next 3 years vouchers were always associated with a loss in revenue and also media publicity and visibility moreover the f grade being the lowest performing grade was likely associated with shame and stigma therefore the threatened schools had a strong incentive to try to avoid the second f 2 this paper studies some alternative ways in which the threatened schools responded facing the incentives built into the system under the 1999 florida grading criteria certain percentages of a school s students had to score above some specified cutoffs on the score scale for it to escape the second f therefore the threatened schools had an incentive to focus more on students expected to score just below these high stakes cutoffs rather than equally on all students did this take place in practice second to escape an f grade the schools needed to pass the minimum criteria in only one of the three subject areas of reading math and writing did this induce the threatened schools to concentrate more on one subject rather than equally on all if so which subject area did the schools choose to concentrate on one alternative would be to concentrate on the subject area closest to the cutoff 3 but subject areas differ in the extent of difficulties so it is not immediately obvious that it is easiest to pass the cutoff in the subject area closest to the cutoff rather schools are likely to weigh the extent of difficulties of the different subjects and their distances from the cutoffs and choose the subject that is least costly to pass the cutoff in addition to analyzing the above questions this study also tries to look at a broader picture if the threatened schools concentrated on students expected to score just below the high stakes cutoffs did their improvements come at the expense of higher performing ones using highly disaggregated school level florida data from 1993 through 2002 and a difference in differences analysis as well as a regression discontinuity rd analysis i investigate the above issues the schools that received the first f grade in 1999 were directly threatened and hence constitute my treated group of schools

on the political economy of educational vouchers abstract two significant challenges hamper the analyses of the collective choice of educational vouchers one is the multi dimensional choice set arising from the interdependence of the voucher public education spending and taxation second even absent a voucher preferences over public spending are not single peaked a middling level of public school spending may be less attractive to a household than either high public school spending or private education coupled with low public spending we show that besley and coate s 1997 representative democracy model provides a viable approach to overcome these hurdles we provide a complete characterization of equilibria with an endogenous voucher a voucher is adopted in political equilibrium provided the coefficient of variation of income is sufficiently small we undertake a parallel quantitative analysis and we find that no voucher arises in equilibrium for the u s income distribution which exhibits too much heterogeneity for a tighter income distribution including those in douglas county colorado where a voucher was recently adopted our model predicts a positive voucher public support for a not too large voucher arises because the cross subsidy to public school expenditure from those switching to private schools outweighs the subsidy to those who attend private school in the absence of a voucher

measuring the impacts of teachers i evaluating bias in teacher value added estimates are teachers impacts on students test scores value added a good measure of their quality one reason this question has sparked debate is disagreement about whether value added va measures provide unbiased estimates of teachers causal impacts on student achievement we test for bias in va using previously unobserved parent characteristics and a quasi experimental design based on changes in teaching sta using school district and tax records for more than one million children we nd that va models which control for a student s prior test scores exhibit little bias in forecasting teachers impacts on student achievement although teachers have substantial impacts

competition wages and teacher sorting lessons learned from a voucher reform this paper studies how local school competition affects teacher wages at markets where wages are set via individual wage bargaining using regional variation in private school entry generated by a swedish reform which allowed private schools to enter freely and a comprehensive matched employer employee data covering all high school teachers in sweden over 16 years i analyze the effects of competition on wages as well as labor flows the results suggest that competition translates into higher wages also for teachers in public schools while the average increases are modest new teachers gain 2 percent and high ability teachers in math and science receive 4 percent higher wages in the most competitive areas compared to areas without any competition from private schools several robustness checks support a causal interpretation of the results which together highlight the potential gains from school competition through a more differentiated wage setting of teachers

measuring the impacts of teachers ii teacher value added and student outcomes in adulthood abstract are teachers impacts on students test scores value added a good measure of their quality this question has sparked debate partly because of a lack of evidence on whether high value ad

vouchers and voting an initial estimate based on the median voter model one of the major concerns associated with school voucher proposals is that they will only benefit those who leave public schools in favor of private schools the children left behind in public schools are expected to necessarily be made worse off by such policies this paper provides evidence suggesting that children left behind in public schools will also benefit the available evidence suggests that after a voucher plan voter support for public schools will rise enough to increase the human capital of public school students despite the presence of negative peer group effects

coase theorem complexity and transaction costs this paper by introducing complexity considerations provides a dynamic foundation for the coase theorem and highlights the role of transaction costs in generating inefficient bargaining negotiation outcomes we show when the players have a preference for less complex strategies the coase theorem holds in negotiation models with repeated surplus and endogenous disagreement payoffs if and only if there are no transaction costs specifically complexity considerations select only efficient equilibria in these models without transaction costs while every equilibrium induces perpetual disagreement and inefficiency with transaction costs we also show the latter is true in the rubinstein bargaining model with transaction costs

an economic model of representative democracy this paper develops an approach to the study of democratic policy making where politicians are selected by the people from those citizens who present themselves as candidates for public office the approach has a number of attractive features first it is a conceptualization of a pure form of representative democracy in which government is by as well as of the people second the model is analytically tractable being able to handle multidimensional issue and policy spaces very naturally third it provides a vehicle for answering normative questions about the performance of representative democracy

how vouchers could change the market for education small probability that vouchers will in the foreseeable future be adopted on a large scale in any school district or state at the moment only three states have adopted publicly funded voucher programs and all of these programs are limited in scale nonetheless in recent years over 40 state legislatures have considered proposals to provide some type of voucher program or tuition tax credit for at least some families in a given state or school district and the children s scholarship fund see http www scholarshipfund org has helped create or expand privately funded voucher programs in numerous cities as vouchers become a more significant part of education policy debates the time is right to consider what we know and do not know about the likely effects of adopting various voucher schemes in the balance of this paper i describe both empirical and theoretical work on education that speaks to this topic i argue that we cannot confidently predict the outcomes that would result from various voucher schemes and i also stress that debates over vouchers per se are not informative details concerning funding targeting and discretion in the use of vouchers should greatly affect the outcomes associated with any particular voucher program still empirical evidence on the performance of public versus private schools as well as numerical results from existing simulation models suggest that policymakers should be able to design voucher programs that would be helpful to minority students in large cities public schools in large cities often perform poorly in minority neighborhoods and this is especially true in economically disadvantaged areas

competition between private and public schools vouchers and peer group effects a theoretical and computational model with tax financed tuition free public schools and competitive tuition financed private schools is developed students differ by ability and income achievement depends on own ability and on peers abilities equilibrium has a strict hierarchy of school qualities and two dimensional student sorting with stratification by ability and income in private schools high ability low income students receive tuition discounts while low ability high income students pay tuition premia tuition vouchers increase the relative size of the private sector and the extent of student sorting and benefit high ability students relative to low ability students

subscribe cancel or renew the economics of reading by subscription the authors investigate a consumer s decision of whether or not to join a bookclub and once his her contractual obligations are fulfilled whether to remain as a member cancel his her membership outrights or cancel his her membership and subsequently rejoin the bookclub since the consumer s subscription strategy depends on the transaction costs of purchasing books and on the marketing strategy adopted by bookclubs the authors investigate why bookclubs make introductory offers and or enforce minimum purchase requirements introductory offers allow bookclubs to price discriminate between consumers who self select alternative subscription strategies minimum purchase requirements increase the bookclub s profit by appropriating part of the consumer surplus

bargaining and markets complexity and the competitive outcome abstract rubinstein and wolinsky rev econ stud 57 1990 63 78 consider a simple decentralised market game in which agents meet randomly or voluntarily and bargain over the terms of trade they show that any individually rational price can be sustained as a sequential equilibrium even though the model has a unique competitive outcome here i consider rubinstein and wolinsky s model and show that if complexity costs of implementing strategies enter players preferences together with the standard payoff in the game then every equilibrium is stationary markov and induces the unique competitive price thus i demonstrate that aversion to complexity may provide a justification for the competitive outcome

the central role of noise in evaluating interventions that use test scores to rank schools many programs reward or penalize schools based on students average performance mean reversion is a potentially serious hindrance to the evaluation of such interventions chile s 900 schools program p 900 allocated resources based on cutoffs in schools mean test scores this paper shows that transitory noise in average scores and mean reversion lead conventional estimation approaches to overstate the impacts of such programs it further shows how a regressiondiscontinuity design can be used to control for reversion biases it concludes that p 900 had significant effects on test score gains albeit much smaller than is widely believed

on the economics of subscriptions firms sell journals both by offering subscriptions which provide the purchaser with all issues of the journal and by selling individual copies at a comparatively high price we show that by selling subscriptions in addition to individual copies a monopolist can price discriminate thereby increasing his profits and that such price discrimination may increase the level of social welfare compared to a situation in which no subscriptions are sold

the mix of social and private provision of goods and services abstract in some countries health insurance and education are supplied as social goods at near zero prices and funded from taxation this paper analyses a case where such provision competes with income supplements as a redistribution device and where taxes or transferable vouchers influence the take up of the social goods compared to alternatives available in a private market each consumer chooses to consume either social or private goods and a vertical market segmentation results from differential demand for quality

is the median voter decisive evidence from referenda voting patterns abstract this paper examines whether the voter with the median income is decisive in local spending decisions previous tests have relied on cross sectional data while we make use of a pair of california referenda to estimate a first difference specification the referenda proposed to lower the required vote share for passing local educational bonding initiatives from 67 to 50 and 67 to 55 respectively we find that voters rationally consider future public service decisions when deciding how to vote on voting rules however the empirical evidence strongly suggests that an income percentile below the median is decisive for majority voting rules especially in communities that have a large share of high income voters with attributes that suggest low demand for public services based on a model that explicitly recognizes that each community contains voters with both high and low demand for public school spending we also find that an increase in the share of low demand voters is associated with a lower decisive voter income percentile for the high demand group this two type model implies that our low demand types individuals over age 45 with no children have demands that are 45 lower than other voters collectively these findings are consistent with high income voters with weak preferences for public educational services voting with the poor against increases in public spending on education

evaluating education programs that have lotteried admission and selective attrition we study the effectiveness of magnet programs in an urban district that ration excess demand by admission lotteries differential attrition arises since students who lose the lottery are more likely to pursue options outside the school district than students who win the lottery when students leave the district important outcome variables are often not observed the treatment effects are not point identified we exploit known quantiles of the outcome distribution to construct informative bounds on treatment effects we find that magnet programs improve behavioral outcomes but have no significant effect on achievement

the effect of school choice on participants evidence from randomized lotteries school choice has become an increasingly prominent strategy for enhancing academic achievement to evaluate the impact on participants we exploit randomized lotteries that determine high school admission in the chicago public schools compared to those students who lose lotteries students who win attend high schools that are better in a number of dimensions including peer achievement and attainment levels nonetheless we find little evidence that winning a lottery provides any systematic benefit across a wide variety of traditional academic measures lottery winners do however experience improvements on a subset of nontraditional outcome measures such as self reported disciplinary incidents and arrest rates

selective versus universal vouchers modelling median voter preferences in education under the majority voting rule a system of universally available vouchers uv is politically less feasible than a system of selective vouchers sv confined to families with incomes equal to or less than median voter income after the introduction of uv public expenditure on education will have to be shared with previous private school users per capita expenditure will then drop and or tax will increase since these events will injure the median voter he will reject uv he will be indifferent between the status quo and sv indifference will turn into enthusiasm however if as can be expected the new regime sv brings effective new competition this abstract was borrowed from another version of this item

competition incentives and public school productivity abstract 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 the distribution of households 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

competition between private and public schools testing stratification and pricing predictions abstract when there are peer effects in education private schools have an incentive to vary tuition to attract relatively able students epple and romano american economic review 88 1 1998 33 develop a general equilibrium model characterizing equilibrium pricing and student selection into schools when peer effects are present the model predicts that competition will lead private schools to give tuition discounts to more able students and that this will give rise to an equilibrium exhibiting stratification by income and ability between the public and private sectors and to a hierarchy of schools within the private sector the model also yields a variety of comparative static predictions the predictions of the model are tested in this paper using a unique data set assembled by figlio and stone research in labor economics 1999 115 tests of equilibrium predictions of the model reveal that the propensity to attend private school increases with both income and ability and among private schools the propensity to attend the highest tuition schools rises with both income and ability within private schools tuition declines with student ability with a substantial number of even high income households paying little or no tuition the correlation between income and ability is greater in public than private schools tests of comparative static predictions of the model reveal that both income and ability become stronger predictors of private school attendance as public school expenditure falls income becomes increasingly important in determining placement in the private school hierarchy as public school expenditure falls discounts to ability in the lowest quality private school decline as public school expenditure rises while discounts to ability in the highest quality private school are little affected by changes in public school expenditure expenditure in private schools rises as expenditure in public schools increases these empirical results are consistent with the predictions of the theoretical model

does competition among public schools benefit students and taxpayers tiebout choice among districts is the most powerful market force in american public education naive estimates of its effects are biased by endogenous district formation i derive instruments from the natural boundaries in a metropolitan area my results suggest that metropolitan areas with greater tiebout choice have more productive public schools and less private schooling little of the effect of tiebout choice works through its effect on household sorting this finding may be explained by another finding students are equally segregated by school in metropolitan areas with greater and lesser degrees of tiebout choice among districts

does school choice lead to sorting evidence from tiebout variation a question commonly raised about school choice is whether it would result in sorting or stratification previous research has asked this with respect to inter district or tiebout choice but has generated no consensus in part because areas district concentrations may be endogenous this paper addresses this by exploiting the fact that some metropolitan areas mas have different numbers of districts operating at the primary and the secondary level the resulting within ma between educational level variation in district concentration suggests that increases in district availability do affect children s district and school level peer groups and that they lower private enrollment jel h1 h7 i2

the performance and competitive effects of school autonomy this paper studies a recent british reform that allowed public high schools to opt out of local authority control and become autonomous schools funded directly by the central government schools seeking autonomy had only to propose and win a majority vote among current parents almost one in three high schools voted on autonomy between 1988 and 1997 and using a version of the regression discontinuity design i find large achievement gains at schools in which the vote barely won compared to schools in which it barely lost despite other reforms that ensured that the british education system was by international standards highly competitive a comparison of schools in the geographic neighborhoods of narrow vote winners and narrow vote losers suggests that these gains did not spill over

school choice stratification and information on school performance lessons from chile in the early 1980s chile implemented a nationwide school choice system under which the government finances education via a flat per student sub sidy or voucher to the public or private school chosen by a family at present about 94 percent of all schools public religious and secular private are voucher funded more than half of urban schools are private and most of these operate as for profit institutions 1 since the early 1990s chile has also publicized information on school performance and increased per pupil expen diture substantially despite these and other reforms chile has found it challenging to improve students learning outcomes 2 hsieh and urquiola find that the country s rel ative performance in international tests did not change much between 1970 and 1999 3 its performance on the 2000 programme for international student assessment pisa is not only much lower than the oecd average but is similar to that of other latin american countries and low relative to countries with similar income per capita

educational vouchers and cream skimming 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

information asymmetry and equilibrium monitoring in education abstract we develop a theoretical and computational model of school choice and achievement that embeds information asymmetries in the provision of education because school effort is unobservable to households and policymakers schools have an incentive to under provide effort this moral hazard affects both public and private schools although public schools are subject to an additional distortion because of limited competition and fixed funding household monitoring of schools can mitigate moral hazard but some households may free ride on the monitoring of others using our calibrated model we simulate two policies aimed at raising achievement public monitoring of public schools and private school vouchers our results indicate that in large scale settings no single tool may suffice the reason is twofold a no tool raises achievement or welfare for all households and b since the extent of moral hazard is endogenous the application of each tool has unintended consequences that limit its own effectiveness results also indicate that setting the policy parameters for public schools at the levels preferred by the majority of households may mitigate the distortions nonetheless the current actual values of these parameters seem to match more closely the preferences of public schools than the preferences of parents

majority voting in a model of means testing abstract we study a model of endogenous means testing where households differ in their income and where the in kind transfer received by each household declines with income majority voting determines the two dimensions of public policy the size of the welfare program and the means testing rate we establish the existence of a sequential majority voting equilibrium and show that the means testing rate increases with the size of the program but the fraction and the identity of the households receiving the transfers are independent of the program size furthermore the set of subsidy recipients does not depend on households preferences but depends only on income heterogeneity

the aggregate effect of school choice evidence from a two stage experiment in india we present experimental evidence on the impact of a school choice program in the indian state of andhra pradesh that provided students with a voucher to finance attending a private school of their choice the study design featured a unique two stage lottery based allocation of vouchers that created both student level and market level experiments which allows us to study the individual and the aggregate effects of school choice including spillovers after two and four years of the program we find no difference between test scores of lottery winners and losers on telugu native language math english and science social studies suggesting that the large cross sectional differences in test scores across public and private schools mostly reflect omitted variables however private schools also teach hindi which is not taught by the public schools and lottery winners have much higher test scores in hindi furthermore the mean cost per student in the private schools in our sample was less than a third of the cost in public schools thus private schools in this setting deliver slightly better test score gains than their public counterparts better on hindi and same in other subjects and do so at a substantially lower cost per student finally we find no evidence of spillovers on public school students who do not apply for the voucher or on private school students suggesting that the positive effects on voucher winners did not come at the expense of other students jel codes c93 h44 h52 i21 o15

selection on observed and unobserved variables assessing the effectiveness of catholic schools in this paper we measure the effect of catholic high school attendance on educational attainment and test scores because we do not have a good instrumental variable for catholic school attendance we develop new estimation methods based on the idea that the amount of selection on the observed explanatory variables in a model provides a guide to the amount of selection on the unobservables we also propose an informal way to assess selectivity bias based on measuring the ratio of selection on unobservables to selection on observables that would be required if one is to attribute the entire effect of catholic school attendance to selection bias we use our methods to estimate the effect of attending a catholic high school on a variety of outcomes our main conclusion is that catholic high schools substantially increase the probability of graduating from high school and more tentatively attending college we find little evidence of an effect on test scores

mobility targeting and private school vouchers simulations are derived from a three district model of low middle and highincome school districts calibrated to new york data with housing stocks that vary within and across districts in this model it is demonstrated that school district targeted vouchers are similar in their impact to nontargeted vouchers but vastly different from vouchers targeted to low income households furthermore strong migration effects are shown to significantly improve the likely equity consequences of voucher programs jel 122 128 h73 persistent frustration with the perceived low quality of public education exacerbated by concerns over the inherently unequal levels of public school quality across school districts has caused policy makers courts and researchers to investigate modifications and alternatives to the current public school system one idea that has received increasing academic and public attention is that of private school vouchers with proponents arguing that the competitive pressures of voucher programs would cause improvements in the efficiency of the publicschool system while at the same time addressing equity concerns if vouchers can be targeted to low income households or low income school districts but aside from a few limited experiments in some u s cities our experience with vouchers in the united states remains virtually nonexistent this limits the amount of information researchers can derive from standard empirical analysis in that it forces them to rely on only current nonvoucher induced differences in competition despite important suggestive results such work may not anticipate all the impacts from a large scale policy such as the voucher policies currently under discussion at the same time theoretical models of school finance are also limited in that they often either focus on only one particular aspect of the general equilibrium school finance problem or they are too rich and complex to yield crisp predictions

a letter to the editor on wage bargaining abstract the rubinstein perfect information alternating offers bargaining model is problematic when applied to wage negotiations a strike or any other industrial action is not an automatic consequence of a delay in reaching an agreement because production can continue normally also when negotiations take place this paper extends the rubinstein model to incorporate the choice of calling a strike and it is shown that in this model there is no longer a unique subgame perfect equilibrium and that strikes with a length in real time can occur in equilibrium

experimentally estimated impacts of school vouchers on college enrollment and degree attainment abstract we provide the first experimental estimates of the long term impacts of a voucher to attend private school by linking data from a privately sponsored voucher initiative in new york city which awarded the scholarships by lottery to low income families to administrative records on college enrollment and degree attainment we find no significant effects on college enrollment or four year degree attainment of the offer of a voucher however we find substantial marginally significant impacts for minority students and large significant impacts for the children of women born in the united states negative point estimates for the children of non minority and foreign born mothers are not statistically significant at conventional levels the information needed to match students to administrative data on postsecondary outcomes was available for 99 of the sample we find evidence of substantial bias due to attrition in the original evaluation which relied on data collected at follow up sessions

complexity and competition extensive form market games typically have a large number of noncompetitive equilibria in this paper we argue that the complexity of noncompetitive behavior provides a justification for competitive equilibrium in the sense that if rational agents have an aversion to complexity at the margin then maximizing behavior will result in simple behavioral rules and hence in a competitive outcome for this purpose we use a class of extensive form dynamic matching and bargaining games with a finite number of agents in particular we consider markets with heterogeneous buyers and sellers and deterministic exogenous sequential matching rules although the results can be extended to other matching processes if the complexity costs of implementing strategies enter players preferences lexicographically with the standard payoff then every equilibrium strategy profile induces a competitive outcome

tiebout choice and universal school vouchers abstract this paper examines who is likely to gain and who is likely to lose under a universal voucher program following epple and romano d epple r e romano competition between private and public schools vouchers and peer group effects american economic review 88 1998 33 62 d epple r e romano neighborhood schools choice and the distribution of educational benefits in c m hoxby ed the economics of school choice the univ of chicago press chicago 2003 pp 227 286 and nechyba t j nechyba mobility targeting and private school vouchers american economic review 90 2000 130 146 t j nechyba introducing school choice into multidistrict public school systems in c m hoxby ed the economics of school choice the univ of chicago press chicago 2003 pp 145 194 we focus on the idea that gains and losses under a universal voucher depend on two effects changes in peer group composition and changes in housing values we show that the direction and magnitude of each of these effects hinge critically on market structure i e the amount of school choice that already exists in the public sector in markets with little or no tiebout choice potential changes in peer group composition create an incentive for high socioeconomic ses households to vote for the voucher and for low ses households to vote against voucher in contrast in markets with significant tiebout choice potential changes in housing values create an incentive for high ses households to vote against the voucher and for low ses households to vote for the voucher using data on vote outcomes from california s 2000 voucher initiative we find evidence consistent with those predictions

ends against the middle determining public service provision when there are private alternatives abstract public provision of a service coexists with private market provision the quality of public provision is determined by majority vote preferences are not single peaked owing to the presence of private alternatives we identify two cases in one majority voting equilibrium always exists and the median income voter is pivotal in the other a necessary condition for equilibrium indentifies the pivotal voter who must have income below the median when equilibrium exists a coalition of middle income households who consume the public alternative will be opposed by a coalition of rich and poor households with the rich choosing private consumption

incentives work getting teachers to come to school we use a randomized experiment and a structural model to test whether monitoring and financial incentives can reduce teacher absence and increase learning in india in treatment schools teachers attendance was monitored daily using cameras and their salaries were made a nonlinear function of attendance teacher absenteeism in the treatment group fell by 21 percentage points relative to the control group and the children s test scores increased by 0 17 standard deviations we estimate a structural dynamic labor supply model and find that teachers respond strongly to financial incentives our model is used to compute cost minimizing compensation policies jel i21 j31 j45 o15

private school vouchers and student achievement an evaluation of the milwaukee parental choice program in 1990 wisconsin began providing vouchers to a small number of low income students to attend nonsectarian private schools controlling for individual fixed effects i compare the test scores of students selected to attend a participating private school with those of unsuccessful applicants and other students from the milwaukee public schools i find that students in the milwaukee parental choice program had faster math score gains than but similar reading score gains to the comparison groups the results appear robust to data imputations and sample attrition although these deficiencies of the data should be kept in mind when interpreting the results

school vouchers a survey of the economics literature we review the theoretical computational and empirical research on school vouchers with a focus on the latter our assessment is that the evidence to date is not sufficient to warrant recommending that vouchers be adopted on a widespread basis however multiple positive findings support continued exploration specifically the empirical research on small scale programs does not suggest that awarding students a voucher is a systematically reliable way to improve educational outcomes and some detrimental effects have been found nevertheless in some settings or for some subgroups or outcomes vouchers can have a substantial positive effect on those who use them studies of large scale voucher programs find student sorting as a result of their implementation although of varying magnitude evidence on both small scale and large scale programs suggests that competition induced by vouchers leads public schools to improve moreover research is making progress on understanding how vouchers may be designed to limit adverse effects from sorting while preserving positive effects related to competition finally our sense is that work originating in a single case e g a given country or in a single research approach e g experimental designs will not provide a full understanding of voucher effects fairly wide ranging empirical and theoretical work will be necessary to make progress

school vouchers in practice competition will not hurt you abstract since the introduction of school vouchers in 1992 independent and public schools in sweden operate on equal terms we analyze the effects of competition on the public schools using data on the results of 28 000 ninth graders because the decision on which school to attend is a choice variable sample selection models are used to account for the potential endogeneity of the share of students attending independent schools we use instrumental variable estimation we also estimate panel data models on 288 swedish municipalities our findings support the hypothesis that school results in public schools improve due to competition

reputation and school competition abstract stratification is a distinctive feature of competitive education markets that can be explained by a preference for good peers learning externalities can lead students to care about the ability of their peers resulting in across school sorting by ability this paper shows that a preference for good peers and therefore stratification can also emerge endogenously from reputational concerns that arise when graduates use their college of origin to signal their ability reputational concerns can also explain puzzling observed trends including the increase in student investment into admissions exam preparation and the decline in study time at college jel i21 i23 i26 j24

can increasing private school participation and monetary loss in a voucher program affect public school performance evidence from milwaukee abstract the milwaukee voucher program as implemented in 1990 allowed only non sectarian private schools to participate in the program following a wisconsin supreme court ruling the program saw a major shift and entered into its second phase when religious private schools were allowed to participate for the first time in 1998 this led to more than a three fold increase in the number of private schools and almost a four fold increase in the number of choice students moreover due to some changes in funding provisions the revenue loss per student from vouchers increased in the second phase of the program this paper analyzes the impacts of increase in competition brought about by these changes on public school performance in milwaukee using data from 1987 to 2002 and a difference in differences estimation strategy in trends the paper finds that these changes have led to an improvement of the public schools in the second phase of the program as compared to the first phase the results are robust to alternative samples and specifications and survive several sensitivity checks including correcting for mean reversion the findings imply that voucher design matters and choice of parameters in a voucher program is crucial as far as impacts on public school incentives and performance are concerned

capitalization and the voucher an analysis of precinct returns from california s proposition 174 abstract in 1993 californians voted on a school voucher initiative we hypothesize that homeowners in good school districts understood the voucher to be a threat to their property values and thus voted against it precinct returns from los angeles county confirm this hypothesis we also examine an alternative hypothesis explaining the relationship between school quality and precinct returns according to the alternative voters perceived the initiative to be a referendum on public school quality to distinguish between the two hypotheses we compare the voting patterns of homeowners and renters the comparison does not favor one hypothesis over the other

costly bargaining and renegotiation we identify the inefficiencies that arise when negotiation between two parties takes place in the presence of transaction costs first for some values of these costs it is efficient to reach an agreement but the unique equilibrium outcome is one in which agreement is never reached secondly even when there are equilibria in which an agreement is reached we find that the model always has an equilibrium in which agreement is never reached as well as equilibria in which agreement is delayed for an arbitrary length of time finally the only way in which the parties can reach an agreement in equilibrium is by using inefficient punishments for some of the opponent s deviations we argue that this implies that when the parties are given the opportunity to renegotiate out of these inefficiencies the only equilibrium outcome which survives is the one in which agreement is never reached regardless of the value of the transaction costs

educational vouchers welfare effects and voting abstract we analyze the welfare effects and voting equilibrium with vouchers for private schools the analysis shows that vouchers like tuition tax credits martinello and west 1988 frey 1983 may improve the welfare of all families including families whose children remain in public schools if public educational quality is unchanged and publicly financed educational expenditures decrease thus voters will approve a voucher only if it reduces taxes when public educational quality is endogenous a voucher may increase quality by reducing the tax cost of quality and will be approved if it reduce taxes at the pre voucher public education level and increases quality

efficient repeated implementation this paper examines repeated implementation of a social choice function scf with innitely lived agents whose preferences are determined randomly in each period an scf is repeated implementable in nash equilibrium if there exists a sequence of possibly history dependent mechanisms such that i its nash equilibrium set is non empty and ii every nash equilibrium outcome corresponds to the desired social choice at every possible history of past play and realizations of uncertainty we show with minor qualications that in the complete information environment an scf is repeated implementable in nash equilibrium if and only if it is ecient we also discuss several extensions of our analysis including constructions employing only nite mechanisms

striking for a bargain between two completely informed agents this paper models the wage contract negotiation procedure between a union and a firm as a sequential bargaining process in which the union must decide in each period whether or not to strike for the duration of that period we show that there exist subgame perfect equilibria in which the union engages in several periods of strikes prior to reaching a final agreement although both parties are completely rational and fully informed this has implications for other inefficient phenomena such as tariff wars debt negotiations and wars in general we characterize the set of equilibria show that strikes can occur in real time and discuss extensions of the model such as lockouts and the possibility of multiple recontracting opportunities copyright 1991 by american economic association

long term educational consequences of secondary school vouchers evidence from administrative records in colombia colombia s paces program provided over 125 000 poor children with vouchers that covered the cost of private secondary school the vouchers were renewable annually conditional on adequate academic progress since many vouchers were assigned by lottery program effects can reliably be assessed by comparing lottery winners and losers estimates using administrative records suggest the paces program increases secondary school completion rates by 15 to 20 percent correcting for the greater percentage of lottery winners taking college admissions tests the program increased test scores by two tenths of a standard deviation in the distribution of potential test scores jel i21 j12 i28

minding the gap between schools and universities abstract during the 2000s decade governments in south america reallocated per student public expenditures from tertiary to basic education potentially alleviating the economic gap between students in public schools and public universities to investigate the welfare and macroeconomic effects of such types of policies we build and calibrate a general equilibrium model using brazilian data from the beginning of the 2000s we find that the optimal utilitarian policy allocates per student public expenditures equally across education stages benefits almost the entirety of households delivers significant welfare gains to the poorest families and cuts back income inequality we also use our framework to investigate economic differences between brazil and the united states and find that differences in the supply of vacancies in public universities is the education policy aspect that alone has the highest explanatory power over aggregate earnings and college attendance differences between the two countries

complexity and repeated implementation this paper examines the problem of repeatedly implementing an ecient social choice function when the agents preferences evolve randomly we show that the freedom to set dierent mechanisms at dierent histories can give the planner an additional leverage to deter undesirable behavior even if the mechanisms are restricted to be simple and nite specically we construct a history dependent sequence of simple mechanisms such that with minor qualications every pure subgame perfect equilibrium delivers the correct social choice at every history while every mixed equilibrium is strictly pareto dominated more importantly when faced with agents with a preference for less complex strategies at the margin the ecient social choice function can be repeatedly implemented in subgame perfect equilibrium in pure or mixed strategies our results demonstrate a positive role for complexity considerations in mechanism design

accountability and flexibility in public schools evidence from boston s charters and pilots charter schools are publicly funded but operate outside the regulatory framework and collective bargaining agreements characteristic of traditional public schools in return for this freedom charter schools are subject to heightened accountability this paper estimates the impact of charter school attendance on student achievement using data from boston where charter schools enroll a growing share of students we also evaluate an alternative to the charter model boston s pilot schools these schools have some of the independence of charter schools but operate within the school district face little risk of closure and are covered by many of same collective bargaining provisions as traditional public schools estimates using student assignment lotteries show large and significant test score gains for charter lottery winners in middle and high school in contrast lottery based estimates for pilot schools are small and mostly insignificant the large positive lottery based estimates for charter schools are similar to estimates constructed using statistical controls in the same sample but larger than those using statistical controls in a wider sample of schools the latter are still substantial however the estimates for pilot schools are smaller and more variable than those for charters with some significant negative effects

school markets the impact of information approximating schools effectiveness abstract the impact of competition on school performance is likely to depend on whether parents are informed about schools effectiveness or value added which may or may not be correlated with absolute measures of their quality and on whether this information influences their school choices thereby affecting schools market outcomes this paper explores this by considering chile s sned program which seeks to identify effective schools selecting them from homogeneous groups of comparable institutions its results are widely disseminated and the information it generates is different from that conveyed by a simple test based ranking of schools which turns out to approximate a ranking based on socioeconomic status we use a sharp regression discontinuity to estimate the effect that being identified as a sned winner has on schools enrollment tuition levels and socioeconomic composition through five applications of the program we find no consistent evidence that winning a sned award affects these outcomes

optimal pricing of local telephone service although payment for nearly all other goods and services including toll long distance telephone calls increases with greater consumption nearly 90 percent of the residential telephone subscribers and more than half the business subscribers in the united states now pay a flat monthly rate for local calls see larry garfinkel recently however the telephone companies and regulatory commissions have been moving cautiously toward imposing usage charges for local telephone calls there is renewed interest in what is currently termed usage sensitive pricing t usp it is due to the combined forces of inflation increased local usage and competition from independent firms that sell telephone terminal equipment and supply private toll lines to business customers under usp the pricing of such services as telephone installation directory assistance and minutes of calling is based on incremental rather than average costs since world war ii technological advances have benefited long distance far more than local telephone calling development in microwave communications coaxial cable satellites and waveguides have dramatically lowered the costs of long distance transmission in contrast the costs of local service have moved upward since the late 1960 s at a rate not far below the general price index see at t 1975 faced with a continuing stream of requests for local telephone rate increases state regulatory commissions are finding the concept of tying prices to usage increasingly attractive at t and some of the independent telephone carriers are beginning to test usp plans in several cities with flat rate tariffs increases in local calling add to carrier costs but not to their revenues the local calling rate per subscriber has increased by an average of 2 percent for the past seven years at t s chairman has stated we are moving more and more in the direction of usage sensitive pricing see washington star news p a12 and according to newspaper accounts of at t management documents the bell system plans to phase out flat rate telephone service and begin charging for each local call in major metropolitan areas in 1978 80 see seattle postintelligencer pp 1 10 still regulatory commissions consumer groups and the carriers themselves remain cautious about requiring usage sensitive tariffs for all subscribers the prospective gains from prices more closely related to costs are at least partially offset by the added costs of metering equipment and billing most telephone subscribers prefer flat rates according to bell system marketing surveys see garfinkel p 28 and it is by no means clear which groups of subscribers will be helped and which harmed by such revisions in local tariff structures will the poor end up paying more because they use their phones more should different prices be charged for calls at different times of day on what bases should the monthly and per call rates be determined the purpose of this paper is to sort out some of the questions of economic efficiency and equity that arise when changes are considered in the methods of pricing local telephone services in section i i construct a department of economics the rand corporation and the international institute of management berlin this study was supported under a grant from the john and mary r markle foundation i am indebted to walter s baer for numerous contributions to this paper to s c littlechild and patricia munch and to the managing editor and a referee of this review for critical and constructive review of a draft i have benefited as well from the comments and suggestions of james h alleman stanley m besen william s comanor john m drew leland l johnson john a kay edward d lowry carl pavarini john rolph ralph turvey and chris witze bryant mori assisted with the computer programming see my 1976 paper for a more extensive version of this paper which also discusses optimal flat rate and optimal peak load tariffs

do accountability and voucher threats improve low performing schools abstract we study the effects of the threat of vouchers and stigma in florida on the performance of low performing schools estimates of the change in raw test scores from the first year of the reform are consistent with the early results which claimed large improvements associated with the threat of vouchers however we also find that much of this estimated effect may be due to other factors the relative gains in reading are largely explained by changing student characteristics and the gains in math though larger appear limited to the high stakes grade we also find some evidence that these improvements were due more to the stigma of receiving the low grade rather than the threat of vouchers

vouchers for private schooling in colombia evidence from a randomized natural experiment colombia used lotteries to distribute vouchers which partially covered the cost of private secondary school for students who maintained satisfactory academic progress three years after the lotteries winners were about 10 percentage points more likely to have finished 8th grade primarily because they were less likely to repeat grades and scored 0 2 standard deviations higher on achievement tests there is some evidence that winners worked less than losers and were less likely to marry or cohabit as teenagers benefits to participants likely exceeded the 24 per winner additional cost to the government of supplying vouchers instead of public school places

peer effects teacher incentives and the impact of tracking evidence from a randomized evaluation in kenya to the extent that students benefit from high achieving peers tracking will help strong students and hurt weak ones however all students may benefit if tracking allows teachers to better tailor their instruction level lower achieving pupils are particularly likely to benefit from tracking when teachers have incentives to teach to the top of the distribution we propose a simple model nesting these effects and test its implications in a randomized tracking experiment conducted with 121 primary schools in kenya while the direct effect of highachieving peers is positive tracking benefited lower achieving pupils indirectly by allowing teachers to teach to their level jel i21 j45 o15

a simple model of educational standards the author models standards for educational credentials such as high school diplomas standard setters maximize their conception of social welfare knowing that utility maximizing students choose whether to meet the standard the author shows that more egalitarian policymakers set lower standards the median voter would prefer higher standards under symmetric distributions and decentralization lowers standards among identical communities optimal standards do not necessarily fall with increased student preference for leisure deterioration of nonstudent inputs to education or increased student heterogeneity superseding binary credentials by perfect information increases average achievement and social welfare for plausible degrees of heterogeneity egalitarianism and pooling under decentralization

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 bbestq public school students left for the private sector d 2005 elsevier b v all rights reserved

perfect equilibria in a negotiation model rubinstein s alternating offers bargaining model is enriched by assuming that players payoffs in disagreement periods are determined by a normal form game it is shown that such a model can have multiple perfect equilibria including inefficient ones provided that players are sufficiently patient delay is possible even though there is perfect information and the players are fully rational the length of delay depends only on the payoff structure of the disagreement game and not on the discount factor not all feasible and individually rational payoffs of the disagreement game can be supported as average disagreement payoffs indeed some negotiation games have a unique perfect equilibrium with immediate agreement