When Schools Compete, How Do They Compete? An Assessment of Chile's Nationwide School Voucher Program. Occasional Paper.

In 1981, Chile introduced nationwide school choice by providing vouchers to any student wishing to attend private school. As a result, more than 1,000 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. Using differences across roughly 300 municipalities, this paper shows that the first-order effect of this program was increased sorting, as the "best" public-school students switched to the private sector. A simple method was used to make the more general point that if choice leads to sorting, then one cannot determine its impact on achievement solely by assessing whether public schools improve in response to competition or by measuring whether students benefit from attending private schools. Rather, one has to look at changes in aggregate outcomes in entire educational markets. Finally, using test scores, repetition rates, and grade for age as measures of achievement, no evidence was found that the large reallocation of students from public to private schools improved average educational performance in Chile. (Contains 48 references, 12 tables, and 12 figures.) (Author/RT)