Theory Meets Reality in the Education Voucher Debate: Some Evidence from Chile

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Abstract
This paper contributes to the education voucher debate by evaluating some of the most fundamental arguments supporting vouchers. Analysis of an authentuc voucher system in Chile shows that punlic schools produce higher quality education as measured by the achievement test scores after controlling for school resources and the tyoe of student enrolled. However, the findings also indicate that each type of schoold specializes: public schools achieve higher preformance with disadcantaged children while private schools produce higher scores with ‘high quality’ students (students whose parents have high education levels or students who have higher scores initially). Second, greater competition may lead to higher quality education, but the size of the effect is larger for private schools. Moreover, it appears that compettion promotes municipalities to spend more wisely on education from their own-source revenues and this additional spending raises public-school scores in competitive areas. Hence, public schools may repond to competitive pressures even though they are hindered by a centralized, more bureaucratic adiministration than private schools. Competition itself may deserve greater emphasis than traditional privatization arguments for improving the quality of education.