ecn152-lecture16

ecn152-lecture16 - Economics152: EconomicsofEducation...

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Economics 152:   Economics of Education Professor Scott Carrell Lecture 17:  School Choice –  Private Schools and Vouchers
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Motivations • Last time:  introduction to school choice – Rationale:  threat of exit generates competitive  pressure on public schools – Evidence:  Hoxby (1998) • For large-scale school choice to work:  – Exit options must be available – Schools must compete on productivity – Threat of exit must be viable – private schools must  be more productive, on average, than public schools
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Overview of Today’s Lecture • Are private schools more productive? • The identification problem – Students/families self-select into private schools  – Private school attendance not randomly assigned • Approaches to this problem – Neal (2002):  overview – Howell, Wolf, Peterson, and Campbell (2001):   small scale voucher experiments
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A Simple Model:  Assumptions • Assumption 1 :  family decides how much to  spend on education (S) and other goods (O) • Assumption 2 :  each family has preferences  over S and O – Strong preference for S   willing to give up a lot  of O to buy one more unit of S (MRS “big”) – Weak preference for S   not willing to give up a  lot of O to buy one more unit of S (MRS “small”)
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A Simple Model:  Assumptions • Assumption 3 :  budget constraint for family  j – Note that                    – Thus, the slope of the budget constraint is  (initially)    -1:  $1 more spent on S is $1 less spent  on O  • Assumption 4 :  families choose S and O to  maximize utility   j j j I O S = + 1 = = Ο Σ π
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Simple Model:  Implications • Families with strong  preferences for S  will  spend more on S,  holding constant I   higher private  school attendance S O S* strong O* strong S* wea k O* weak
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Simple Model:  Implications • Families with higher  income, I , will spend  more on S, holding  preferences   higher private  school attendance S O S* poor O* poor S* rich O* rich
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Implications for Estimation • Difficult to estimate effect of attending a  private over a public school
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ecn152-lecture16 - Economics152: EconomicsofEducation...

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