Chilean vouchers

Co-blogger Alex and I had been having a debate over school vouchers, here is Alex’s last word, with links to the debate and my earlier posts, click here and here. I am skeptical about vouchers, although not from an anti-market point of view. We have seen from the electricity and water sectors that mixed public-private systems often create bad incentives, and do not always improve performance.

Brad Delong now cites NBER research (the paper itself costs $5) that school vouchers have not improved educational performance in Chile.

Here is a quotation from the 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. We use this differential impact to measure the effects of unrestricted choice on educational outcomes. Using panel data for about 150 municipalities, we find no evidence that choice improved average educational outcomes as measured by test scores, repetition rates, and years of schooling. However, we find evidence that the voucher program led to increased sorting, as the best public school students left for the private sector.

My take: I am still willing to experiment with vouchers, mainly because they would give many inner city kids a chance they don’t currently have. But sometimes I wonder how much schooling, in the formal sense, matters at all. The United States has mediocre schooling, by international standards, but still produces highly productive individuals. Maybe a school is really just a collection of kids, in which case you can only get so far by reshuffling the mix.

Addendum: Here is a version of the paper.