Market-based school reforms and educational inequality: the case of Chile
Keywords: inequality of educational opportunities
educational inequalities
effects of school vouchers
voucher schools
market-oriented school reforms

This thesis aims to contribute more empirical evidence to the discussion on the effects of market-based school reforms in Chile. The most important of these reforms are the 1981 national voucher school plan and the introduction of a shared school financing scheme in 1993. The first established school choice and competition between all public schools and those private schools that wanted to be part of the new funding scheme consisting of a flat-rate per-student voucher provided by the state; this reform also gave private voucher schools the ability to select students and make a profit. The new financing scheme introduced in 1993 allowed private voucher schools to charge parents tuition fees on top of the state voucher.
Using data from the longitudinal Chilean Social Protection Survey - including hitherto unpublished data exclusively retrieved from individual questionnaires for the purposes of this thesis - and three waves of the Chilean National Socioeconomic Survey (CASEN), the first part of my thesis examines how school-type choice has been mediated by socioeconomic characteristics of students in Chile for almost six decades. My empirical findings indicate that, although socioeconomic stratification of students across school types existed in Chile long before 1981, the stratification between those who attended public and private voucher schools increased after 1981, mainly mediated by parental education. My findings also suggest that after 1993 the link between socioeconomic background and the preference for a private voucher school became more pronounced, and this change was mostly mediated by parental education and parental social status.
The second empirical part of my thesis aims to determine whether having attended a private voucher school rather than a public voucher school in the post-1981 period made a difference to students’ educational attainment and labour market outcomes at the age of 25. Based on data from the longitudinal Chilean Social Protection Survey and using potential outcome models under the assumption of selection on observable individual characteristics, I estimated positive and significant effects of having attended a private rather than a public voucher school on the access and completion of post-secondary studies by the age of 25. Although I could not find any effect of school type on the employment situation of individuals at that age, I did find positive effects of having attended a subsidised-private rather than a public school on hourly earnings at the age of 25. Although not causal, I did not find evidence that private voucher schools increased their effectiveness relative to public schools after the former started charging co-payments in 1993.
I conclude that the Chilean voucher school system that provided different guarantees to public and private schools between 1981 and 2015 has probably acted as a vehicle for the reproduction of educational and economic inequalities. Since Chile is the only country in the world that has combined vouchers with for-profit educational institutions and the permission given to subsidised-private schools both to apply their own criteria in selecting students and to charge tuition fees on top of the vouchers, the Chilean experience provides useful policy lessons for any country considering marked-based school reforms.