Essays on Educational Vouchers

Abstract

This dissertation examines three different but related aspects of educational voucher programs.

An introductory chapter describes the relevant questions in the literature, and draws a connecting line between the three essays that follow.

Next, Tomas Rau, Sergio Urzua and I examine a fundamental question in the voucher literature, that relates to the effects that vouchers have on the students who use them. We advance the literature by focusing not only on short-term outcomes, but also on long-term educational outcomes, namely college admission exams, college enrollment, and college degree attainment. We apply our analysis to administrative panel data from Chile, and find that vouchers have positive effects on test scores (0.07 and 0.01 standard deviations on verbal and math, respectively), which translate into important effects on college-related outcomes, especially on the likelihood that a student attends college. We also find substantial heterogeneity in the estimated effects, where in general low-ability students benefit more from vouchers than high-ability students.

In the chapter that follows, I study an aspect often overlooked in the literature: schools' responses to voucher policies. Using an equilibrium model of demand and supply of elementary schools in Chile, I empirically examine private schools' voucher program participation and tuition decisions under voucher regimes. I focus on universal (available to all students) and targeted (available only to low-income students) vouchers. I find that higher targeted voucher subsidies attract more schools to participate in the voucher program, but that high-quality schools join the program only if the subsidy is sufficiently high. I also find that targeted voucher policies have an almost negligible effect on schools' tuition setting. In contrast, schools' substantially respond in prices to universal voucher policies. Specifically, a $1 dollar increase in the universal voucher translate into a $0.58 decrease in average tuition. Consequences for students' school choices are also documented.

In the last chapter, I study another form of schools' responses to voucher policies, that relates to schools' strategic behavior to comply with some of the voucher programs' requirements. A targeted voucher program in Chile requires that participating schools meet specific academic goals in the form of schools' own average scores in standardized tests. Using rich administrative panel data from Chile, I show that schools engaged in a strategic behavior to meet the academic requirements: they kept their lowest-performing students from taking the standardized tests. Specifically, I find that low-performing students are 20% less likely to take the tests due to the program. Moreover, the program does not have an effect on the likelihood that high-performing students take the tests. Implications of this result for public policy and research are discussed.