Nothing Special   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/sip/dpaper/15-019.html
   My bibliography  Save this paper

Quantifying the Supply Response of Private Schools to Public Policies

Author

Listed:
  • Michael Dinerstein

    (Stanford University)

  • Troy Smith

    (Stanford University)

Abstract
Public school policies that cause a large demand shift between public and private schooling may cause some private schools to enter or exit the market. This private school supply response further alters students’ choices and likely amplifies the policy’s effect. Thus, the policy effects under a fixed versus a changing market structure may be very different. To study this difference, we consider New York City’s Fair Student Funding reform, which changed the budgets of the city’s public schools starting in the 2007-08 school year. We find that relative to the schools that did not receive additional funding, elementary public schools that benefited from the reform saw an estimated increase in enrollment of 6.5%. We also find evidence of private school exit in response to the reform by comparing private schools located close to or far from public schools that received additional funding. A private school located next to a public school that received an average (6%) increase in its budget was an estimated 1.5 percentage points, on a base of 12%, more likely to close in the subsequent two years. We estimate a concise model of demand for and supply of private schooling and estimate that 30% of the total enrollment increase came from increased private school exit and reduced private school entry. Finally, we assess the reform’s impact on aggregate achievement. We find that while the reform improved school quality at the public schools that received additional funding, the sorting of some students from private to public schools led them to lower-quality schools. This sorting undid much of the reform’s positive achievement effect.

Suggested Citation

  • Michael Dinerstein & Troy Smith, 2015. "Quantifying the Supply Response of Private Schools to Public Policies," Discussion Papers 15-019, Stanford Institute for Economic Policy Research.
    • Handle: RePEc:sip:dpaper:15-019
    as

    Download full text from publisher

    File URL: http://www-siepr.stanford.edu/repec/sip/15-019.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Caroline Minter Hoxby, 2003. "School Choice and School Productivity. Could School Choice Be a Tide that Lifts All Boats?," NBER Chapters, in: The Economics of School Choice, pages 287-342, National Bureau of Economic Research, Inc.
    2. Alan B. Krueger, 1999. "Experimental Estimates of Education Production Functions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(2), pages 497-532.
    3. Joseph G. Altonji & Todd E. Elder & Christopher R. Taber, 2005. "Selection on Observed and Unobserved Variables: Assessing the Effectiveness of Catholic Schools," Journal of Political Economy, University of Chicago Press, vol. 113(1), pages 151-184, February.
    4. Thomas J. Nechyba, 1999. "School Finance Induced Migration and Stratification Patterns: The Impact of Private School Vouchers," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 1(1), pages 5-50, January.
    5. Epple, Dennis & Figlio, David & Romano, Richard, 2004. "Competition between private and public schools: testing stratification and pricing predictions," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1215-1245, July.
    6. Raj Chetty & John N. Friedman & Nathaniel Hilger & Emmanuel Saez & Diane Whitmore Schanzenbach & Danny Yagan, 2011. "How Does Your Kindergarten Classroom Affect Your Earnings? Evidence from Project Star," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 126(4), pages 1593-1660.
    7. Susan Dynarski & Jonathan Gruber & Danielle Li, 2009. "Cheaper By the Dozen: Using Sibling Discounts at Catholic Schools to Estimate the Price Elasticity of Private School Attendance," NBER Working Papers 15461, National Bureau of Economic Research, Inc.
    8. Barrow, Lisa, 2006. "Private school location and neighborhood characteristics," Economics of Education Review, Elsevier, vol. 25(6), pages 633-645, December.
    9. Dee, Thomas S., 1998. "Competition and the quality of public schools," Economics of Education Review, Elsevier, vol. 17(4), pages 419-427, October.
    10. Lakshmi Pandey & David L. Sjoquist & Mary Beth Walker, 2009. "An Analysis of Private School Closings," Education Finance and Policy, MIT Press, vol. 4(1), pages 34-59, January.
    11. Stephanie Riegg Cellini & Fernando Ferreira & Jesse Rothstein, 2010. "The Value of School Facility Investments: Evidence from a Dynamic Regression Discontinuity Design," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(1), pages 215-261.
    12. Christopher Neilson & Michael Dinerstein & Sebastián Otero, 2020. "The Equilibrium Effects of Public Provision in Education Markets: Evidence from a Public School Expansion Policy," Working Papers 645, Princeton University, Department of Economics, Industrial Relations Section..
    13. Paul Peterson & William Howell & Patrick J. Wolf & David Campbell, 2003. "School Vouchers. Results from Randomized Experiments," NBER Chapters, in: The Economics of School Choice, pages 107-144, National Bureau of Economic Research, Inc.
    14. Tahir Andrabi & Jishnu Das & Asim Ijaz Khwaja, 2017. "Report Cards: The Impact of Providing School and Child Test Scores on Educational Markets," American Economic Review, American Economic Association, vol. 107(6), pages 1535-1563, June.
    15. T. A. Downes & D. N. Figlio, "undated". "School Finance Reforms, Tax Limits, and Student Performance: Do Reforms Level Up or Dumb Down?," Institute for Research on Poverty Discussion Papers 1142-97, University of Wisconsin Institute for Research on Poverty.
    16. Lucia Foster & John Haltiwanger & Chad Syverson, 2008. "Reallocation, Firm Turnover, and Efficiency: Selection on Productivity or Profitability?," American Economic Review, American Economic Association, vol. 98(1), pages 394-425, March.
    17. Raj Chetty & John N. Friedman & Jonah E. Rockoff, 2014. "Measuring the Impacts of Teachers II: Teacher Value-Added and Student Outcomes in Adulthood," American Economic Review, American Economic Association, vol. 104(9), pages 2633-2679, September.
    18. Fernanda Estevan, 2015. "Public education expenditures and private school enrollment," Canadian Journal of Economics, Canadian Economics Association, vol. 48(2), pages 561-584, May.
    19. Kane, Thomas J. & Rockoff, Jonah E. & Staiger, Douglas O., 2008. "What does certification tell us about teacher effectiveness? Evidence from New York City," Economics of Education Review, Elsevier, vol. 27(6), pages 615-631, December.
    20. Mark Doms & Eric J. Bartelsman, 2000. "Understanding Productivity: Lessons from Longitudinal Microdata," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 569-594, September.
    21. Austan Goolsbee & Jonathan Guryan, 2006. "The Impact of Internet Subsidies in Public Schools," The Review of Economics and Statistics, MIT Press, vol. 88(2), pages 336-347, May.
    22. repec:mpr:mprres:3180 is not listed on IDEAS
    23. William N. Evans & Robert M. Schwab, 1995. "Finishing High School and Starting College: Do Catholic Schools Make a Difference?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(4), pages 941-974.
    24. Joshua Angrist & Victor Lavy, 2002. "New Evidence on Classroom Computers and Pupil Learning," Economic Journal, Royal Economic Society, vol. 112(482), pages 735-765, October.
    25. Caroline Minter Hoxby, 1994. "Do Private Schools Provide Competition for Public Schools?," NBER Working Papers 4978, National Bureau of Economic Research, Inc.
    26. Besley, Timothy & Coate, Stephen, 1991. "Public Provision of Private Goods and the Redistribution of Income," American Economic Review, American Economic Association, vol. 81(4), pages 979-984, September.
    27. repec:mpr:mprres:3181 is not listed on IDEAS
    28. Michael Dinerstein & Troy D. Smith, 2021. "Quantifying the Supply Response of Private Schools to Public Policies," American Economic Review, American Economic Association, vol. 111(10), pages 3376-3417, October.
    29. Engberg, John & Gill, Brian & Zamarro, Gema & Zimmer, Ron, 2012. "Closing schools in a shrinking district: Do student outcomes depend on which schools are closed?," Journal of Urban Economics, Elsevier, vol. 71(2), pages 189-203.
    30. Card, David & Payne, A. Abigail, 2002. "School finance reform, the distribution of school spending, and the distribution of student test scores," Journal of Public Economics, Elsevier, vol. 83(1), pages 49-82, January.
    31. Jonathan Gruber & Phillip Levine & Douglas Staiger, 1999. "Abortion Legalization and Child Living Circumstances: Who is the "Marginal Child"?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(1), pages 263-291.
    32. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    33. Donald Boyd & Hamilton Lankford & Susanna Loeb & Jonah Rockoff & James Wyckoff, 2008. "The narrowing gap in New York City teacher qualifications and its implications for student achievement in high-poverty schools," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 27(4), pages 793-818.
    34. Dennis Epple & Akshaya Jha & Holger Sieg, 2018. "The superintendent's dilemma: Managing school district capacity as parents vote with their feet," Quantitative Economics, Econometric Society, vol. 9(1), pages 483-520, March.
    35. Cecilia Elena Rouse, 1998. "Private School Vouchers and Student Achievement: An Evaluation of the Milwaukee Parental Choice Program," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(2), pages 553-602.
    36. Christopher R. Walters, 2018. "The Demand for Effective Charter Schools," Journal of Political Economy, University of Chicago Press, vol. 126(6), pages 2179-2223.
    37. Julien Lafortune & Jesse Rothstein & Diane Whitmore Schanzenbach, 2018. "School Finance Reform and the Distribution of Student Achievement," American Economic Journal: Applied Economics, American Economic Association, vol. 10(2), pages 1-26, April.
    38. Chakrabarti, Rajashri & Roy, Joydeep, 2016. "Do charter schools crowd out private school enrollment? Evidence from Michigan," Journal of Urban Economics, Elsevier, vol. 91(C), pages 88-103.
    39. Julia Thomas & Berardino Palazzo & Aubhik Khan & Gian Luca Clementi, 2014. "Entry, Exit and the Shape of Aggregate Fluctuations in a General Equilibrium Model with Capital Heterogeneity," 2014 Meeting Papers 1344, Society for Economic Dynamics.
    40. C. Kirabo Jackson & Cora Wigger & Heyu Xiong, 2018. "Do School Spending Cuts Matter? Evidence from The Great Recession," NBER Working Papers 24203, National Bureau of Economic Research, Inc.
    41. Greene, Kenneth V. & Kang, Byung-Goo, 2004. "The effect of public and private competition on high school outputs in New York State," Economics of Education Review, Elsevier, vol. 23(5), pages 497-506, October.
    42. Ehrenberg, Ronald G. & Brewer, Dominic J., 1995. "Did teachers' verbal ability and race matter in the 1960s? Coleman revisited," Economics of Education Review, Elsevier, vol. 14(1), pages 1-21, March.
    43. Maria Marta Ferreyra, 2007. "Estimating the Effects of Private School Vouchers in Multidistrict Economies," American Economic Review, American Economic Association, vol. 97(3), pages 789-817, June.
    44. Rockoff, Jonah E., 2010. "Local response to fiscal incentives in heterogeneous communities," Journal of Urban Economics, Elsevier, vol. 68(2), pages 138-147, September.
    45. Hsieh, Chang-Tai & Urquiola, Miguel, 2006. "The effects of generalized school choice on achievement and stratification: Evidence from Chile's voucher program," Journal of Public Economics, Elsevier, vol. 90(8-9), pages 1477-1503, September.
    46. Stephanie Riegg Cellini, 2009. "Crowded Colleges and College Crowd-Out: The Impact of Public Subsidies on the Two-Year College Market," American Economic Journal: Economic Policy, American Economic Association, vol. 1(2), pages 1-30, August.
    47. Goldhaber, Dan D., 1996. "Public and private high schools: Is school choice an answer to the productivity problem?," Economics of Education Review, Elsevier, vol. 15(2), pages 93-109, April.
    48. Chingos, Matthew M. & Peterson, Paul E., 2015. "Experimentally estimated impacts of school vouchers on college enrollment and degree attainment," Journal of Public Economics, Elsevier, vol. 122(C), pages 1-12.
    49. Daniel P. Mayer & Paul E. Peterson & David E. Myers & Christina Clark Tuttle & William G. Howell, 2002. "School Choice in New York City After Three Years: An Evaluation of the School Choice Scholarships Program," Mathematica Policy Research Reports bd29adb569094778a5981be0e, Mathematica Policy Research.
    50. Atila Abdulkadiroğlu & Weiwei Hu & Parag A. Pathak, 2013. "Small High Schools and Student Achievement: Lottery-Based Evidence from New York City," NBER Working Papers 19576, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Juan Pablo Atal & José Ignacio Cuesta & Felipe González & Cristóbal Otero, 2024. "The Economics of the Public Option: Evidence from Local Pharmaceutical Markets," American Economic Review, American Economic Association, vol. 114(3), pages 615-644, March.
    2. Cohn, Ricardo Meilman, 2020. "Effects of public-school choice on private schools: Evidence from open enrollment reform," CLEF Working Paper Series 23, Canadian Labour Economics Forum (CLEF), University of Waterloo.
    3. Nikhil Agarwal & Paulo J. Somaini, 2019. "Revealed Preference Analysis of School Choice Models," NBER Working Papers 26568, National Bureau of Economic Research, Inc.
    4. Kory Kroft & René Leal-Vizcaíno & Matthew J. Notowidigdo & Ting Wang, 2022. "Parallel inverse aggregate demand curves in discrete choice models," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 74(3), pages 923-946, October.
    5. Christopher Neilson & Claudia Allende & Francisco Gallego, 2019. "Approximating the Equilibrium Effects of Informed School Choice," Working Papers 628, Princeton University, Department of Economics, Industrial Relations Section..
    6. Marx, Benjamin & Bazzi, Samuel & Hilmy, Masyhur, 2020. "Religion, Education, and the State," CEPR Discussion Papers 14689, C.E.P.R. Discussion Papers.
    7. Michael Dinerstein & Troy D. Smith, 2021. "Quantifying the Supply Response of Private Schools to Public Policies," American Economic Review, American Economic Association, vol. 111(10), pages 3376-3417, October.
    8. Adam J. Kapor & Christopher A. Neilson & Seth D. Zimmerman, 2020. "Heterogeneous Beliefs and School Choice Mechanisms," American Economic Review, American Economic Association, vol. 110(5), pages 1274-1315, May.
    9. Athira Vinod, 2024. "Affirmative action and private education expenditure by disadvantaged groups: Evidence from India," Discussion Papers 2024-02, University of Nottingham, CREDIT.
    10. Christopher Neilson & Michael Dinerstein & Sebastián Otero, 2020. "The Equilibrium Effects of Public Provision in Education Markets: Evidence from a Public School Expansion Policy," Working Papers 645, Princeton University, Department of Economics, Industrial Relations Section..
    11. Michael Gilraine & Hugh Macartney & Robert McMillan, 2018. "Estimating the Direct and Indirect Effects of Major Education Reforms," NBER Working Papers 24191, National Bureau of Economic Research, Inc.
    12. Samuel Bazzi & Masyhur Hilmy & Benjamin Marx, 2020. "Islam and the State: Religious Education in the Age of Mass Schooling," SciencePo Working papers Main hal-03389196, HAL.
    13. Federico Echenique & Joseph Root & Fedor Sandomirskiy, 2024. "Stable matching as transportation," Papers 2402.13378, arXiv.org.
    14. Samuel Bazzi & Masyhur Hilmy & Benjamin Marx, 2020. "Islam and the State: Religious Education in the Age of Mass Schooling∗," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-349, Boston University - Department of Economics.
    15. Hungerman, Daniel M. & Rinz, Kevin, 2016. "Where does voucher funding go? How large-scale subsidy programs affect private-school revenue, enrollment, and prices," Journal of Public Economics, Elsevier, vol. 136(C), pages 62-85.
    16. Bau, Natalie, 2019. "Estimating an Equilibrium Model of Horizontal Competition in Education," CEPR Discussion Papers 13924, C.E.P.R. Discussion Papers.
    17. repec:spo:wpmain:info:hdl:2441/3jngk2o32k9hgasm59p1d3tmli is not listed on IDEAS
    18. Masuda, Kazuya & Yamauchi, Chikako, 2018. "The Effects of Universal Secondary Education Program Accompanying Public-Private Partnership on Students' Access, Sorting and Achievement: Evidence from Uganda," CEI Working Paper Series 2018-4, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    19. Christopher A. Neilson, 2021. "Targeted Vouchers, Competition Among Schools, and the Academic Achievement of Poor Students," Working Papers 2021-48, Princeton University. Economics Department..
    20. repec:hal:spmain:info:hdl:2441/3jngk2o32k9hgasm59p1d3tmli is not listed on IDEAS
    21. Jessica H. Brown, 2018. "Does Public Pre-K Have Unintended Consequences on the Child Care Market for Infants and Toddlers?," Working Papers 626, Princeton University, Department of Economics, Industrial Relations Section..
    22. Nikhil Agarwal & Paulo J. Somaini, 2022. "Demand Analysis under Latent Choice Constraints," NBER Working Papers 29993, National Bureau of Economic Research, Inc.
    23. Chen, Feng & Harris, Douglas N., 2023. "The market-level effects of charter schools on student outcomes: A national analysis of school districts," Journal of Public Economics, Elsevier, vol. 228(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dennis Epple & Richard E. Romano & Miguel Urquiola, 2017. "School Vouchers: A Survey of the Economics Literature," Journal of Economic Literature, American Economic Association, vol. 55(2), pages 441-492, June.
    2. Jean-Michel Plassard & Nhu Tran Thi Thanh, 2009. "Liberté de choix des élèves et concurrence des établissements : un survey de l'analyse du pilotage des systèmes éducatifs par les quasi-marchés," Revue d'économie industrielle, De Boeck Université, vol. 0(2), pages 99-130.
    3. Christopher Neilson & Michael Dinerstein & Sebastián Otero, 2020. "The Equilibrium Effects of Public Provision in Education Markets: Evidence from a Public School Expansion Policy," Working Papers 645, Princeton University, Department of Economics, Industrial Relations Section..
    4. Joseph G. Altonji & Ching-I Huang & Christopher R. Taber, 2015. "Estimating the Cream Skimming Effect of School Choice," Journal of Political Economy, University of Chicago Press, vol. 123(2), pages 266-324.
    5. Michela Tincani, 2014. "School Vouchers and the Joint Sorting of Students and Teachers," Working Papers 2014-012, Human Capital and Economic Opportunity Working Group.
    6. David Card & Martin D. Dooley & A. Abigail Payne, 2010. "School Competition and Efficiency with Publicly Funded Catholic Schools," American Economic Journal: Applied Economics, American Economic Association, vol. 2(4), pages 150-176, October.
    7. María Orduz, 2022. "Effect of educational spending on academic performance under different institutional arrangements," Documentos CEDE 20224, Universidad de los Andes, Facultad de Economía, CEDE.
    8. Cohen-Zada, D., 2009. "An alternative instrument for private school competition," Economics of Education Review, Elsevier, vol. 28(1), pages 29-37, February.
    9. David N. Figlio & Cassandra M.D. Hart & Krzysztof Karbownik, 2020. "Effects of Scaling Up Private School Choice Programs on Public School Students," NBER Working Papers 26758, National Bureau of Economic Research, Inc.
    10. Michael Gilraine & Hugh Macartney & Robert McMillan, 2018. "Estimating the Direct and Indirect Effects of Major Education Reforms," NBER Working Papers 24191, National Bureau of Economic Research, Inc.
    11. Lai, Fang & Sadoulet, Elisabeth & de Janvry, Alain, 2009. "The adverse effects of parents' school selection errors on academic achievement: Evidence from the Beijing open enrollment program," Economics of Education Review, Elsevier, vol. 28(4), pages 485-496, August.
    12. Welsch, David M. & Zimmer, David M., 2012. "Do student migrations affect school performance? Evidence from Wisconsin's inter-district public school program," Economics of Education Review, Elsevier, vol. 31(1), pages 195-207.
    13. Correa, Juan A. & Parro, Francisco & Sánchez, Rafael, 2021. "The Effect of School Voucher Spending on Initial Earnings," IZA Discussion Papers 14552, Institute of Labor Economics (IZA).
    14. Crystal Zhan, 2018. "School Choice Programs And Location Choices Of Private Schools," Economic Inquiry, Western Economic Association International, vol. 56(3), pages 1622-1645, July.
    15. Matthew Ridley & Camille Terrier, 2018. "Fiscal and education spillovers from charter school expansion," CEP Discussion Papers dp1577, Centre for Economic Performance, LSE.
    16. Chang-Tai Hsieh & Miguel Urquiola, 2002. "When Schools Compete, How Do They Compete? An Assessment of Chile's Nationwide School Voucher Program," Working Papers 123, Princeton University, Department of Economics, Center for Economic Policy Studies..
    17. Masuda, Kazuya & Yamauchi, Chikako, 2018. "The Effects of Universal Secondary Education Program Accompanying Public-Private Partnership on Students' Access, Sorting and Achievement: Evidence from Uganda," CEI Working Paper Series 2018-4, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    18. Abott, Carolyn & Kogan, Vladimir & Lavertu, Stéphane & Peskowitz, Zachary, 2020. "School district operational spending and student outcomes: Evidence from tax elections in seven states," Journal of Public Economics, Elsevier, vol. 183(C).
    19. Godstime Osekhebhen Eigbiremolen, 2020. "Estimating Private School Premium for Primary School Children in Ethiopia: Evidence from Individual-level Panel Data," Progress in Development Studies, , vol. 20(1), pages 26-44, January.
    20. Hungerman, Daniel M. & Rinz, Kevin, 2016. "Where does voucher funding go? How large-scale subsidy programs affect private-school revenue, enrollment, and prices," Journal of Public Economics, Elsevier, vol. 136(C), pages 62-85.

    More about this item

    JEL classification:

    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sip:dpaper:15-019. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Anne Shor (email available below). General contact details of provider: https://edirc.repec.org/data/cestaus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.