The Chilean experience with vouchers,<sup>consistent with the theoretical predictions,</sup> suggests that when enrollments are the<sup>estimatefor school effort,schools take steps to</sup> make themselves more attractive to parents<sup>by enrollinga more advantagedclientele.</sup> Whereas the New Zealand experience<sup>showed that sorting effectsof thissort can be</sup> problematic when the supply of schools<sup>isfixed, the experiencein Chileillustratesthat</sup> sorting can also occur when there is a<sup>strong supply response.In Chile, the effectsof</sup> intense incentives based on enrollment<sup>weremodest in the national capital,and zero or</sup> negative elsewhere. That is also consistent<sup>with theexpectation that when school effort is</sup> not directly related to productivity,<sup>intenseincentivesdo not lead to increasesin</sup> performance. The fact that no municipal<sup>schoolswereclosed is consistentwith the fact</sup> that intense incentives can carry costs for<sup>risk averseagents,who will fight effortsto</sup> relocate or close schools. Finally, Chile's<sup>voucherformula includedadjustmentsfor rural</sup> schools, in recognition of the need to include<sup>covariatesof enrollmentin intense</sup> incentives.

_Colombia._ Starting in 1992, a program<sup>in Colombia offered vouchers toentering</sup> sixth grade students residing in low-income<sup>neighborhoodsand who had previously</sup> attended a public school. The vouchers<sup>wererenewable through the end of secondary</sup> school, co-financed by the central government<sup>and participatingmunicipalities,and</sup> assigned by lottery where local demand<sup>exceeded the municipal allotment.The voucher</sup> program was designed to help poor students<sup>make the transition tosecondary schoolin</sup> areas where public schools were filled<sup>tocapacity.Financing to public schools was not</sup> reduced when they lost students to the<sup>program.The valueof thevoucher was initially</sup> high enough to pay for tuition at low-cost<sup>private schools,butit was not indexed to</sup> inflation, and as a result by 1998 participating<sup>studentswere typicallymakingout-of-</sup> pocket payments equal to the voucher value<sup>to cover tuition costs.Most elite private</sup> schools in Colombia elected not to accept<sup>thevouchers.The programprovided125,000</sup> students, amounting to about 1 percent<sup>of national secondary enrollment,with vouchers</sup> before it was discontinued in 1997<sup>(Angristand others2001,King and others1997, King,</sup> Orazem, and Wolgemuth 1999, Calder6n<sup>1996, Montenegro1995).</sup> A quasi-experimental study compared<sup>educationaland other outcomesamong a</sup> sample of students who won and lost<sup>the voucherlottery (Angristand others 2001).</sup> Lottery winners had lower grade repetition<sup>rates than losers but werenot more likely to</sup> be enrolled in school. A sample of lottery<sup>winnersalso scored 0.2 standard deviations</sup> higher on standardized tests, controlling<sup>for age,gender,parents'schooling, and strata of</sup> residence, and almost 0.3 standard<sup>deviations higher in a two-stageleast squares</sup> regression that took into account private<sup>school scholarshipsotherwiseobtained by</sup> lottery losers and scholarship non-use<sup>by winners.Theeffects for girls were slightly</sup> larger, and were estimated more precisely,<sup>than for boys.Winnersspent $52 more on</sup> school fees than lottery losers, gave up<sup>$41in reducedearningssince they remainedin</sup> 15