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Contents
Preface vii
IV Conclusions
Figure 1.1
A Typology of the Interconnection between Public and Private Sectors in Education
point out that the program is still in its very early phase and a more
conclusive picture is likely to be obtained a few more years into the
program.
In the concluding chapter of this book, Harry A. Patrinos reviews the
evidence on the impact of educational contracting in both developing
and developed countries, including vouchers, charter schools and their
variants in different countries, and private finance of school infrastruc-
tural arrangements. He suggests that research on these initiatives in
developing countries is still very limited, and calls for rigorous impact
evaluations.
We believe that the chapters that follow give us important insights
relating to the different kinds of educational choice prevailing in other
countries. Combining informative descriptions of such programs along
with rigorous policy evaluations, the essays provide a balanced and
comprehensive look at this very important strand of educational initia-
tives in other parts of the world.
Overall, the results seem very promising. While Nechyba in chapter
3 shows that private school vouchers have the potential to raise both
equity and efficiency, Wößmann’s study (chapter 2) shows that pub-
licly funded, privately managed initiatives provide an effective means
of improving cognitive outcomes of students, and Bettinger (chapter
7) and Barrera-Osorio (chapter 9) respectively provide evidence that
two forms of public-private partnerships in Colombia have led to
improvements of educational outcomes for the students involved. The
chapters by Muralidharan and Kremer (chapter 5) and Kingdon (chap-
ter 6) show similar promising findings for private schools in India.
Although the establishment of explicit public-private partnerships
(under the ‘‘Right to Education’’ Bill) is still being vigorously debated
in India, the comparative efficiency of the private sector implies that
such initiatives hold considerable promise there.
The results from Chile and the United Kingdom are, however, much
less definitive. The English city academies program is still in its very
early stages and it is too early to say anything conclusive as to its
impacts. The Chilean program, however, has been in operation for a
long time. In the absence of random assignments of students between
public and voucher schools (as is the case in Chile), it is very difficult
to accurately determine whether or not voucher schools are more effec-
tive than public schools. While Bellei’s essay (chapter 8) constitutes an
improvement over some of the existing literature on Chile, even his
most preferred specifications are likely to suffer from endogeneity
10 Rajashri Chakrabarti and Paul E. Peterson
bias.5 As a result, the results from the Chilean study cannot be consid-
ered as conclusive. However, this study does an excellent job of dem-
onstrating that results are often sensitive to the methodology and data
used by researchers, which in turn points to the importance of choos-
ing the correct methodology and data.
The findings of the chapters that follow suggest that the effects of a
program depend crucially on the conditions under which it is imple-
mented, the design of the specific policy, as well as the design of the
empirical methodology. While the chapters in this volume provide im-
portant and valuable insight into public-private partnerships in educa-
tion under various situations and in various countries, we need much
more research before we can understand in a conclusive manner the
effects of different kinds of initiatives.
Notes
land scholarship program, in Paul E. Peterson and Bryan C. Hassel (eds.), Learning from
School Choice (Washington, D.C.: Brookings Institution, 1998); Patrick J. Wolf, Babette
Gutmann, Nada Eissa, Michael Puma, and Marsha Silverberg, Evaluation of the DC Oppor-
tunity Scholarship Program: First Year Report on Participation, U.S. Department of Educa-
tion, National Center for Education Evaluation and Regional Assistance (Washington,
D.C.: U.S. Government Printing Office, 2005). For a comprehensive analysis and lessons
from school choice in New Zealand, see Edward B. Fiske and Helen F. Ladd, When
Schools Compete: A Cautionary Tale (Washington, D.C.: Brookings Institution, 2000).
3. See Caroline M. Hoxby, School choice and school productivity (Or, could school
choice be the tide that lifts all boats?), in Caroline M. Hoxby (ed.), The Economics of School
Choice (Chicago: University of Chicago Press, 2003); Caroline M. Hoxby, School choice
and school competition: Evidence from the United States, Swedish Economic Policy Review
10 (2003); Rajashri Chakrabarti, Can increasing private school participation and mone-
tary loss in a voucher program affect public school performance? Evidence from the Mil-
waukee voucher experiment, forthcoming, Journal of Public Economics; Jay P. Greene and
Marcus Winters, When schools compete: The effects of vouchers on Florida public school
achievement, Education Working Paper 2, Manhattan Institute, 2003; Jay P. Greene, An
evaluation of the Florida A-Plus Accountability and School Choice Program (New York: Man-
hattan Institute for Policy Research, 2001); Rajashri Chakrabarti, Impact of voucher de-
sign on public school performance: Evidence from the Florida and Milwaukee voucher
programs, mimeo, Harvard University, Program on Education Policy and Governance,
2004; David Figlio and Cecilia Rouse, Do accountability and voucher threats improve
low-performing schools?, Journal of Public Economics 90 (2006): 239–255; Martin R. West
and Paul E. Peterson, The efficacy of choice threats within school accountability systems:
Results from legislatively induced experiments, The Economic Journal 116 (2006): C46–
C62; Rajashri Chakrabarti, Vouchers, public school response and the role of incentives:
Evidence from Florida, mimeo, Harvard University, Program on Education Policy and
Governance, 2006. For a comprehensive review of this literature, and the literature on
privately funded voucher programs in the United States, see William G. Howell and
Paul E. Peterson with Patrick J. Wolf and David E. Campbell, The Education Gap: Vouchers
and Urban Schools, revised edition (Washington, D.C.: Brookings Institution, 2006); and
see William G. Howell and Elena Llaudet, School vouchers, International Encyclopedia
of the Social Sciences, second edition (Framington Hills, MI: MacMillan Reference USA/
Thomas Gale, 2007), for a review of the U.S. and international literature.
4. Eric P. Bettinger, The effect of charter schools on charter students and public schools,
Economics of Education Review 24 (2005): 133–147; Robert Bifulco and Helen F. Ladd, The
effects of charter schools on student achievement: Evidence from North Carolina, Educa-
tion Finance and Policy 1 (2006): 50–90; Eric A. Hanushek, John F. Kain, and Steven G.
Rivkin, The impact of charter schools on academic achievement, Hoover Institution, Stan-
ford University, 2002; Bryan Hassel, Charter school achievement: What we know, Char-
ter School Leadership Council, 2005; Robin J. Lake and Paul T. Hill (eds.), Hopes, fears,
and reality: A balanced look at American charter schools in 2005, Center on Reinventing
Public Education at the University of Washington, 2005; Caroline M. Hoxby and Jonah E.
Rockoff, The impact of charter schools on student achievement, hhttp://post.economics
.harvard.edu/faculty/hoxby/papers/hoxbyrockoff.pdfi, 2004; Caroline M. Hoxby and
Jonah E. Rockoff, The truths about charter schools: Findings from the City of Big Should-
ers, Education Next (Fall 2005); Robert Bifulco and Helen F. Ladd, The truths about char-
ter schools: Results from the Tar Heel State, Education Next (Fall 2005).
5. Some of the explanatory variables, such as books at home, school mean books at home, %
selected students in school, and selected student are likely to be correlated with unobserved
characteristics of families and schools and hence endogenous.
2 Public-Private Partnerships and Student
Achievement: A Cross-Country Analysis
Ludger Wößmann
Figure 2.1
Public Funding and Public Operation of Schools
Note: Average share of public funding and share of publicly operated schools in the
country, respectively. The acronyms stand for: AUT: Austria, BEL: Belgium, BRA: Brazil,
CZE: Switzerland, CHE: Czech Republic, DEU: Germany, DEN: Denmark, ESP: Spain,
FIN: Finland, FRA: France, GBR: United Kingdom, GRC: Greece, HUN: Hungary, IRL:
Ireland, ICE: Iceland, ITA: Italy, JPN: Japan, KOR: Korea, LUX: Luxembourg, LVA: Lat-
via, MEX: Mexico, NLD: Netherlands, NOR: Norway, NZL: New Zealand, POL: Poland,
PRT: Portugal, RUS: Russian Federation, SWE: Sweden, USA: United States.
Source: Own calculations based on PISA microdatabase.
16 Ludger Wößmann
While this chapter goes into the question of effects of different forms
of private involvement in some detail, it should also be clarified right
from the start what the chapter is not about. The topic here is explicitly
the effectiveness of PPPs in providing cognitive skills for students. There-
fore, this chapter does not deal with questions of efficiency (for which
relative costs would have to be taken into account), or with questions
of equity of school systems with differing private involvement, or with
questions of the provision of noncognitive skills. While it goes without
saying that all these issues are of tremendous importance, they go be-
yond the scope of this chapter.
in figure 2.1, are provided in table 2.2. On average across the 29 coun-
tries, 83% of schools are publicly operated, and the remaining 17% are
managed by a private entity. But the share of publicly operated schools
varies substantially across countries, with Belgium (25%) and the Neth-
erlands (26%) at the bottom end and Russia (100%), Latvia (99%), and
Iceland (99%) at the top end. The average share of public funding of
schools across the countries is 87%, with Mexico (37%) and Korea
(49%) at the lower end and Luxembourg, Sweden, Finland, Norway,
and Iceland all with a public share above 99%.
From the perspective of PPPs, it is particularly interesting to note
that the shares of public involvement in operation and funding can dif-
fer substantially within a country (column M in table 2.2). At the one
extreme, the public share is substantially larger in funding than in op-
eration in the Netherlands (a difference of 69 percentage points), Bel-
gium (63), and Ireland (52). At the other extreme, the public share can
also be substantially larger in operation than in funding, as for exam-
ple in Mexico (difference of 48 percentage points) and Italy (19).
It is also revealing to look at the relative shares of public funding in
publicly versus privately operated schools in each country (columns N
and O in table 2.2). Thus, while in most countries publicly operated
schools receive nearly all of their funding from public sources, 56% of
the funding of publicly operated schools in Mexico stems from private
sources, and 45% in Korea. On average across all countries, the share of
public funding in publicly operated schools (at 91%) is 25 percentage
points higher than in privately operated schools (at 66%). The share
of public funding in privately operated schools differs particularly
strongly across countries, with the privately operated schools tested in
Brazil, Greece, and Mexico receiving no funding at all from public
sources (and those in the United Kingdom only 2%), while privately
operated schools in the Netherlands, Finland, Luxembourg, and Swe-
den receive more than 95% of their funding from public sources.
Even more striking is the difference in public funding that publicly
and privately operated schools in a country receive (column P in table
2.2). At the one extreme, the share of public funding in U.K. public
schools is 96 percentage points higher than in U.K. private schools.
This difference is also quite large in other countries, such as Greece
(87 percentage points), Brazil (87), Poland (76), the United States (74),
and Switzerland (73). At the other extreme, there is no difference at
all in the share of public funding between publicly and privately oper-
ated schools in the Netherlands and Luxembourg, and the differences
Table 2.1
20
Table 2.2
International Differences in Public Funding and Public Operation of Schools
Average Average
share of share of
public public
Average Share of funding in funding in
share of publicly publicly privately
public operated operated operated
funding schools Difference schools schools Difference
(K) (L) (M) (N) (O) (P)
AUT 90.4 88.8 1.6 96.2 44.2 52.1
BEL 87.5 24.6 63.0 95.1 85.0 10.1
BRA 78.0 89.4 11.4 87.3 0.0 87.2
CHE 93.8 93.5 0.3 98.5 25.5 73.0
CZE 94.9 93.9 1.0 96.2 74.5 21.7
DEU 97.3 95.9 1.4 98.2 77.1 21.1
DNK 94.3 75.5 18.8 99.9 76.9 23.0
ESP 82.9 61.9 20.9 95.3 62.8 32.5
FIN 99.8 97.2 2.6 99.9 98.3 1.5
FRA 75.5 77.8 2.4 77.3 69.1 8.2
GBR 89.8 90.8 1.0 98.7 2.2 96.4
GRC 83.7 95.8 12.0 87.4 0.0 87.4
HUN 87.4 95.3 7.8 87.9 78.3 9.5
IRL 91.1 39.5 51.6 98.0 86.6 11.4
ISL 99.4 99.2 0.2 99.9 40.4 59.5
ITA 75.2 94.2 19.0 79.2 10.1 69.1
JPN 72.5 69.6 2.9 88.4 36.0 52.4
KOR 49.1 50.6 1.5 54.9 43.3 11.6
LUX 100.0 87.9 12.1 100.0 100.0 0.0
LVA 95.6 99.2 3.6 95.7 89.0 6.7
MEX 36.8 84.5 47.6 43.6 0.0 43.6
NLD 94.7 26.0 68.7 94.7 94.7 0.0
NOR 99.5 98.5 1.0 99.8 82.3 17.5
NZL 80.2 95.1 14.9 83.4 18.4 65.0
POL 92.2 97.1 4.9 94.4 18.1 76.4
PRT 87.9 92.7 4.8 88.5 80.1 8.4
RUS 93.5 100.0 6.5 93.5 — —
SWE 99.9 96.6 3.3 99.9 99.3 0.6
USA 91.6 94.6 2.9 95.6 22.1 73.6
Mean 86.9 83.0 3.9 91.2 65.9 25.4
Notes: In percent. See note to figure 2.1 for a list of country acronyms.
Source: Own calculations based on PISA microdatabase.
Public-Private Partnerships and Student Achievement 23
are also very small in Sweden (0.6 percentage points) and Finland
(1.5).
incentives for efficient behavior from the demand side (cf. Jimenez and
Paqueo 1996; Chubb and Moe 1990). It is not obvious, though, to what
extent this benefit of private involvement would go beyond the benefit
of private provision and the choice that parents can make between dif-
ferent private providers, which would already induce performance-
conducive incentives from the demand side.
This latter point can even be turned into the opposite case favoring
public funding, if combined with the idea that some families may be
too poor to choose privately operated schools if they have to be funded
privately. As long as there are credit constraints that prevent poor fam-
ilies from borrowing against possible future income gains of their chil-
dren due to improved educational performance (cf. Loury 1981; Galor
and Zeira 1993; Gradstein, Justman, and Meier 2004), poor families’
choices of better schools that require higher private funding will be
constrained. Public funding can relax the credit constraints, which can
allow greater choice for all families and therefore increase schools’
incentives to behave efficiently. The empirical evidence of positive
performance effects of (mostly publicly provided) school vouchers to
finance the attendance of privately operated schools (see preceding
references) can be viewed as one aspect of this possible positive effect
of public funding.6
Given the different theoretical arguments as summarized in table 2.3,
we might expect the public versus private nature of the operation and
funding of schools to have an impact on student achievement. The di-
rection and size of this impact remains an empirical question, though.
Table 2.3
Aspects of Public and Private Involvement in School Provision and Funding
Positive aspects of involvement of:
Public sector Private sector
Operation Inculcation of beliefs and Incentives for cost containment
cultural values and qualitative innovation
Funding Enabling choice for credit- Increased accountability
constrained families
Public-Private Partnerships and Student Achievement 25
lyzed in this chapter, and how they may or may not be affected by se-
lection bias.
covðFs ; Ui Þ
EðgÞ ¼ b 2 þ b : ð2:3Þ
varðFs Þ 4
This derivation allows us to pin down the likely direction of the bias
that emanates from credit constraints. The estimate g will be lower than
the true effect b2 of equation (2.1) if b 4 is positive and covðFs ; Ui Þ is neg-
ative. And this is likely to be the case in this particular application.
Let’s say that Ui is (unmeasured) parents’ valuation of education.
Then b 4 is positive, that is, parents’ valuation of education has a
positive impact on their children’s educational performance. And
covðFs ; Ui Þ is negative, because parents’ valuation of education is posi-
tively associated with their willingness (and probably ability) to pro-
vide private funding, and thus negatively related to the share of public
funding in their school. Therefore, the estimate g will be a lower bound
for the true effect b 2 . The larger the covariance between the unobserved
Public-Private Partnerships and Student Achievement 27
features U and the share of private funding, and the larger the effect b 4
of the unobserved features on student performance, the larger will be
the underestimation of the effect of public funding. However, once we
allow for multiple unobserved variables, the uniqueness of this result
is no longer given.
Note also that there may be other possible sources of remaining bias
than credit constraints. Although credit constraints are often viewed as
the main cause of concern for selectivity in education, other unobserv-
able features may give rise to different kinds of bias. As one example,
the selection may not only originate on the student/parent side, but
also on the school side. If privately operated schools have more free-
dom to choose their students, and if the selected students have features
unobserved by the researcher that differ from those of students in
publicly operated schools, then this may give rise to bias also on the
operation side. For example, privately operated schools may have a
preference to admit students who are particularly smart for their ob-
servable features, which would bias the coefficient estimate on O
downwards. Moreover, in empirical applications that use variation
across countries, there may be unobserved country features that are
associated with the share of public operation and funding in a nonran-
dom way. Therefore, the extent and direction of any remaining bias
must ultimately remain an open issue.
Ti ¼ a þ b1 Oc þ b 2 Fc þ Bi b3 þ nc þ hs þ ei ; ð2:4Þ
where Oc and Fc are the share of publicly operated schools and the av-
erage share of public funding of schools in country c, respectively. Both
student test scores Ti and background features Bi are measured at the
student level (the school characteristics in B at the school level), so as
to yield as clean a control for other influence factors as possible. Note
that in the empirical application, the error term will have higher-level
components at the school and country level, which is implemented
by clustering the standard errors at the higher level, and that students
are weighted by their sampling probabilities within each country (see
28 Ludger Wößmann
section 4.3 in Wößmann 2006 for details on the specifics of the micro-
econometric model).
The reason we start with a cross-country specification with country-
level public-private data is the possibility discussed in section 2.2: that
the mere existence of private schools in a city may have systemic
effects due to their effect on how the public schools in the city perform,
because these public schools are now faced with competition from
private schools. Thus, looking at the simple relative performance of
privately and publicly operated schools may well fail to observe the
effects of the existence of the privately operated school. By contrast,
such systemic effects will be captured in the specification that measures
private involvement at the level of the country. The specification
shows whether countries with a larger sector of publicly operated
schools and with a larger share of public funding fare differently on
average on the PISA test than countries with larger shares of private
involvement.
A second advantage of the specification is that it evades the problem
of selection bias just discussed. While it may be the case that students
whose performance differs for other reasons may select (or be selected)
into private schools in nonrandom ways, such selection effects will can-
cel out at the country level. Under the quite confident assumption that
there is no school selection across country borders of an order of mag-
nitude that might affect the presented results, any nonrandom selection
would occur within the observation level of the public-private mea-
sures in specification (2.4) and would therefore not affect the estimates
of b1 and b2 in this specification. Note, though, that one can never
perfectly rule out remaining endogeneity due to unobservables at the
country level.
Specification (2.5) simplifies the picture even further, by classifying
the countries into the four quadrants of figure 2.1 established by the
shares of public operation and public funding. That is, public-private
involvement will be measured just by attributing dummies to the
countries whether they belong to the top left ðTLÞ, the bottom left ðBLÞ
or the bottom right ðBRÞ quadrant of figure 2.1, where the reference
category is the top right quadrant:
vides the results in an even simpler (but also coarser) way: Do the per-
formances of the countries in the four quadrants of figure 2.1 differ sys-
tematically from each other?
Specification (2.6) adds an interaction term between public operation
and public funding to specification (2.4):
Ti ¼ a þ b1 Oc þ b 2 Fc þ Bi b3 þ ðOc Fc Þb4 þ nc þ hs þ ei : ð2:6Þ
The coefficient on the interaction term ðOc Fc Þ depicts whether any ef-
fect of public funding F differs between countries with lower or higher
shares of publicly operated schools.
The next specification makes use of the individual-level data of
public-private involvement in schools. That is, both public operation
Os and public funding Fs are now measured at the level of each school
s, still in a regression encompassing all countries:
Ti ¼ a þ b1 Os þ b2 Fs þ Bi b3 þ ðOs Fs Þb 4 þ hs þ ei : ð2:7Þ
Ti ¼ ac þ b1 Os þ b2 Fs þ Bi b3 þ ðOs Fs Þb 4 þ hs þ ei ; ð2:8Þ
Ec: Ti ¼ a þ b1 Os þ b 2 Fs þ Bi b 3 þ hs þ ei if i A c: ð2:9Þ
Figure 2.2
Student Achievement in the Four Quadrants of Public-Private Involvement
Note: The distinction into countries with relatively low and relatively high shares of pub-
lic operation and funding follows the quadrants in figure 2.1.
Source: table 2.4, column Q.
The basic pattern of results is exactly the same in the other two sub-
jects, reading and science, as the results reported in columns Z and AE
in table 2.5 show. The size of the performance differences in these two
subjects is somewhat smaller, though, and there are slight but statisti-
cally insignificant differences in the size of the estimate on the coeffi-
cient on the bottom left quadrant.
The very same pattern of negative effects of public operation and
positive effects of public funding emerges in specification (2.4) with
country-level data on public-private operation and funding. As the
results reported in columns T, AA, and AF in tables 2.4 and 2.5 reveal,
the coefficient on public operation is statistically significantly negative
in all three subjects, and the coefficient on public funding is positive in
all three subjects and statistically significantly so in math and read-
ing.10 Note that the positive coefficient on public funding in math is
Table 2.5
34
Figure 2.3
The Interaction of Public Operation and Public Funding
(a) Effect of public operation depending on type of funding; (b) Effect of public funding
depending on type of operation
Source: table 2.5, column AD.
38 Ludger Wößmann
Table 2.6
Estimations within Countries
Observa-
Public operation Public funding tions PSUs R2
Pooled
Math 1.63 (2.45) 10.63*** (3.98) 72,493 4,870 0.346
Science 4.01* (2.32) 10.51*** (3.51) 72,388 4,870 0.281
Reading 5.99*** (2.14) 10.43*** (3.52) 130,242 4,882 0.341
Reading
Top left 13.66*** (3.62) 12.40 (11.02) 16,388 637 0.348
BEL 38.51*** (7.07) 0.17 (14.27) 6,345 203 0.506
DNK 5.94 (11.36) 44.56 (42.58) 4,006 208 0.238
IRL 28.17*** (6.18) 16.86 (13.95) 3,791 137 0.330
NLD 9.91 (6.81) 17.80 (35.79) 2,246 89 0.471
Bottom left 7.51** (3.40) 5.75 (5.99) 19,773 598 0.331
ESP 13.05* (7.34) 11.58 (9.52) 5,805 174 0.383
FRA 6.99 (4.75) 3.18 (8.73) 4,077 153 0.494
JPN 36.29* (21.56) 28.67 (18.40) 5,215 134 0.241
KOR 6.10 (5.67) 12.04 (11.57) 4,676 137 0.261
Bottom right 4.41 (7.78) 13.88** (5.65) 20,284 861 0.418
BRA 15.11 (22.75) 20.29** (10.01) 3,951 256 0.342
GRC 23.64 (17.23) 2.86 (16.66) 4,301 144 0.364
ITA 26.79 (19.39) 56.49*** (21.08) 4,704 161 0.356
MEX 32.26*** (11.01) 0.88 (6.12) 3,873 156 0.433
NZL 20.21 (14.80) 68.81*** (19.70) 3,455 144 0.294
Top right 2.79 (4.73) 11.12 (8.24) 74,022 2,795 0.319
AUT 14.60 (12.70) 50.38*** (17.32) 4,501 203 0.400
CHE 34.69* (19.14) 69.35** (28.05) 5,822 268 0.429
CZE 9.14 (12.19) 59.03* (30.20) 5,343 228 0.384
DEU 25.25 (20.40) 6.03 (54.93) 4,430 192 0.486
FIN 2.12 (11.11) 238.14 (254.08) 4,863 155 0.221
GBR 83.86*** (26.85) 5.76 (27.73) 8,658 337 0.331
HUN 3.99 (12.55) 28.81 (24.81) 4,761 183 0.425
ISL 48.75*** (17.90) 32.96 (24.56) 3,229 125 0.175
LUX 21.89* (11.29) — 3,132 22 0.459
LVA 40.72*** (13.41) 20.17 (44.35) 3,037 123 0.315
NOR 35.83 (24.07) 276.67** (115.33) 3,967 165 0.182
POL 23.41 (52.29) 24.23 (66.03) 3,585 125 0.290
PRT 4.83 (20.68) 3.01 (10.43) 4,549 148 0.527
RUS — 5.81 (25.34) 6,563 242 0.279
SWE 10.32 (7.85) 275.32 (403.53) 4,415 154 0.209
USA 47.06 (15.07) 11.81 (19.04) 2,942 116 0.355
40 Ludger Wößmann
Table 2.6
(continued)
Notes: Dependent variable: PISA international test score. Least squares regressions
weighted by students’ sampling probabilities. Regressions include 60 control variables
for student, family, and school characteristics. Robust standard errors adjusted for clus-
tering in parentheses (clustering by school). Regressions that pool countries control for
country fixed effects. The organization of countries follows the four quadrants of figure
2.1. See note to figure 2.1 for a list of country acronyms.
Significance level (based on clustering-robust standard errors): *** 1 percent; ** 5 percent;
* 10 percent.
Source: Own calculations based on PISA microdatabase.
2.5 Conclusion
Notes
Paper prepared for the PEPG–World Bank conference, ‘‘Mobilizing the Private Sector for
Public Education,’’ Kennedy School of Government, Harvard University, October 2005. I
would like to thank the participants of the conference—in particular the two conference
organizers, Rajashri Chakrabarti and Paul Peterson—and my discussant Marty West, as
well as Giorgio Brunello and the referees for very useful comments and discussions. A
first draft of this chapter was circulated under the title ‘‘Public-Private Partnerships in
Schooling: Cross-Country Evidence on their Effectiveness in Providing Cognitive Skills’’
as Harvard University’s Program on Education Policy and Governance Research Paper
PEPG 05-09.
1. Details on the data underlying figure 2.1 will be provided in section 2.1.2. Note that
the specific subdivision into the four quadrants in the figure is arbitrary, chosen so that
each quadrant has at least four countries, and is undertaken for purposes of visualization
only.
2. Among the PISA participants, Australia and Canada did not provide data on the pub-
lic vs. private operation of schools. Liechtenstein was not included in the analysis be-
cause it features only 11 schools (with 314 students), 2 of which are private, and because
it lacks several internationally comparable country-level data. Data for the Netherlands
are provided, although there is a caveat in that the response rate in the Netherlands was
relatively low.
3. Adams and Wu (2002), OECD (2001), and the PISA Web page at hwww.pisa.oecd
.orgi provide detailed information on the PISA study.
4. Fuchs and Wößmann (2007) also provide imputed data for missing observations,
which are used in this chapter with the exception of the data on private vs. public opera-
tion and funding, for which only original data are used.
5. Important contributions to the empirical literature include Howell et al. (2002), Hoxby
(2003a, 2003b), and Neal (1997) for the United States; Bradley and Taylor (2002) and
Levaĉić (2004) for England; Sandström and Bergström (2005) for Sweden; Angrist et al.
(2002) for Colombia; Cox and Jimenez (1991) for Colombia and Tanzania; James, King,
and Suryadi (1996) and Bedi and Garg (2000) for Indonesia; and Mizala and Romaguera
(2000), Mizala, Romaguera, and Farren (2002), Sapelli and Vial (2002), Vegas (2002), and
Hsieh and Urquiola (2006) for Chile.
6. A lot of the discussion of the relative merits of public vs. private involvement in
schooling, in particular on the funding side, also surrounds equity rather than effective-
ness outcomes (cf., e.g., Glomm and Ravikumar 1992; Epple and Romano 1998; Nechyba
2000; Ladd 2002). For reasons of scope, in this chapter we do not deal with the issue that
public funding might serve to redistribute income or to raise opportunities for specific
disadvantaged subgroups of the population, leaving this important issue for future
research.
7. See the working-paper version of this paper (Wößmann 2006) for a list of the control
variables.
8. Note that given the somewhat arbitrary subdivision into the four quadrants of figure
2.1, this quadrant-dummy specification is meant as a depiction of a broad pattern only.
It receives its validity only from the fact that the depicted pattern is vindicated by the
richer specification that follows, where public operation and public funding are entered
as linear variables.
Public-Private Partnerships and Student Achievement 43
9. The values in reading and science are 33.2 and 32.4, respectively.
10. The results on public operation are consistent with evidence from a previous interna-
tional student achievement test, TIMSS, showing that student performance was superior
in countries with a larger share of private enrollment and with a larger share of public
funding going to privately operated schools (Wößmann 2001, 2003).
11. This specification and the results are very similar to those reported in Fuchs and
Wößmann (2007).
12. Previous studies have estimated similar models of the effects of private school opera-
tion within several countries from international achievement tests, but without account-
ing for differences in the source of school funding. Thus, Toma (1996; cf. also 2005)
estimates the effect of private school operation in five countries using the 1981 second
international mathematics test. She notes that the positive effect of private provision is in-
dependent of whether the countries tend to finance the schools publicly or not. Vanden-
berghe and Robin (2004) estimate the effect of private school operation in eight countries
in PISA, comparing several estimation methods that try to address selection bias, but dis-
regarding the funding side of schools.
13. The positive coefficient on public operation in the bottom left quadrant is driven by
the highly imprecise estimate in Japan.
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44 Ludger Wößmann
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3 Mobilizing the Private Sector in the United States:
A Theoretical Overview
Thomas J. Nechyba
the United States, and even within the United States, private schools in
the more Catholic northeast may exist for different reasons than private
schools in the more Protestant south. The challenges for mobilizing the
private sector in positive ways may thus take different forms in differ-
ent regions, and the optimal design of public policies may therefore
differ depending on the context.
Our analysis begins in section 3.1 with an overview of the complex-
ity faced by education policy makers—and the resulting complexity of
an economic approach to analyzing the policy makers’ problem. I then
proceed in sections 3.2 through 3.5 to a discussion of how each of the
private school advantages relate to the benefits and costs of mobilizing
the private sector. In section 3.6 I present results from a model in
which different private school advantages are modeled and illustrate
how different assumptions we make about private school advantages
(and public school responses to competition) can alter our conclusions.
Finally, section 3.7 concludes with some final comments.
tion policy translates into real world outcomes? First, parents decide
where to send their children and how much they are involved in mon-
itoring what happens at home and at school. They have some notion of
what they consider important (Hoxby 1999), and they face resource
constraints given the financial circumstances. Second, children may be
viewed as decision-making agents in the sense that they may exercise
some choice over which peer groups within schools and neighbor-
hoods to join and how much effort toward advancing their education
to expend (Harris 1998; Cooley 2005). Their relevant endowments are
the characteristics (such as innate ability) they bring to the school, and
their tastes may be shaped by a combination of parental, school,
and peer influences.
Third, school officials—both teachers and administrators, may re-
spond to changes in incentives. While their tastes may align to some
extent with those of parents, they may also care about personal ‘‘rents’’
(Chubb and Moe 1990; McMillan 2004; Hoxby 1996) that may be con-
strained in part by the degree of competition they face (Hoxby 2000)
or the types of accountability measures that are in place. Fourth, school
entrepreneurs operate in both the public and the private sector. As
with school officials, their tastes may take a variety of forms and may
include a desire to serve children of particular types as well as to
achieve personal rents of some form. Both school entrepreneurs and
school officials face technological constraints—the mapping of inputs
to outputs that is handed to them by the nature of education produc-
tion (Hanushek 1999; Krueger 1999).
Finally, homeowners and developers may play an important role
when public school access is determined primarily by where parents
live. Parental decisions regarding schools are then inherently bundled
with decisions regarding housing (Oates 1969; Bayer, Ferreira, and
McMillan forthcoming). This, as we will see, impacts both the evolu-
tion of housing prices within established housing markets and the
incentives by suppliers of new housing.
3.1.2 Equilibrium
In equilibrium, some mechanism must then exist to ration parents and
students into neighborhoods and schools and to determine how many
and what kinds of private schools operate. Since public schools typi-
cally do not charge tuition, other prices—in particular those associated
with the cost of housing, adjust to equilibrate supply and demand for
such schools. Alternatively, part of the ‘‘price’’ of choosing a public
50 Thomas J. Nechyba
3.2.2 Equilibrium
An equilibrium with a coexistence of private and public schools can
then emerge in a number of ways. As private schools enter, the public
school shrinks in size—thus reducing the free rider problem and in-
creasing the pressure felt by public school officials as parents can more
effectively coordinate. If efficient private schools can be easily repli-
cated, the resulting equilibrium would be one in which no rents are
possible (due to competition) in the private sector, and all parents are
indifferent between the lower-quality public school and the higher-
quality private schools (that charge tuition). Alternatively, if entrepre-
neurial talent in the private sector is scarce, each new private school
would be less efficient than existing private schools, and rents within
the private school sector would remain for more efficient entrepreneurs
who can charge higher tuitions for higher school quality. Any equilib-
rium, however, would be one in which private schools would provide
higher quality education than the public school, with the possibility
that private schools themselves can be hierarchically ordered based on
the quality they offer (due to the entrepreneurial skill differences in the
private sector). Parents would be uniformly happier, with some chil-
dren (whose parents pay higher tuition) experiencing higher school
quality than others.
case treated in section 3.4. The second arises if the peer effects take the
form of a larger externality that parents themselves have no incentive
to internalize.
Consider, for instance, the possibility that interaction of types results
in a greater awareness of the needs of others, a greater respect for di-
versity, and, in the long run, a better equipped citizenry that can result
in a more harmoniously functioning society. Parents themselves may
place limited value on their own child developing. Put differently,
such externalities result in a classic free rider problem, where each
parent would like to free ride on the benefits from diversity in other
schools while maximizing her own children’s human capital accumula-
tion. Under this scenario, a mobilization of the private sector will result
in too much separation—separation that maximizes production of
human capital at the expense of other social goals. This is not, how-
ever, to say that mobilizing the private sector per se will inevitably re-
sult in too much separation in the presence of these larger externalities.
Rather, to the extent to which policy makers believe that broader social
goals might be achieved, policies aimed at mobilizing the private sec-
tor would have to be designed more specifically with this goal in
mind. For instance, private school voucher amounts could depend on
the demographic mix of students within the private schools that accept
the voucher.
In the absence of such tracking, we have said that one would expect
an equilibrium hierarchy of school quality, with private schools differ-
entiated by peer quality, and the public schools offering lower quality
than all private schools. With the emergence of tracking, on the other
hand, this hierarchy of school quality may take on a different form,
with the lowest track in the public schools offering the lowest quality,
but with some private schools offering school quality below the higher
public school tracks. This is worrisome from an equity perspective
since the logic again predicts that those who end up with the lowest
school quality will be poor households with relatively low-ability chil-
dren. And, with the introduction of vertical peer effects, school quality
for such children may well fall with the mobilization of private
schools.
As before, however, such concerns can, in principle be addressed by
the way in which vouchers are designed (Epple and Romano 2002;
Hoxby 2001). For instance, one can design vouchers to be inversely re-
lated to household income and vary depending on student type—thus
offering increased school resources to those who find it disproportion-
ately difficult to afford private school tuition and those whose children
are disproportionately costly.
ing and school markets suggest that this force may be quite powerful,
resulting in levels of income segregation that are substantially greater
than one would expect in the absence of school considerations
(Nechyba 2003b). To the extent that peer externalities operate not only
within schools but also within residential neighborhoods, this raises
additional concerns related to persistent achievement differences.
that an equilibrium will contain some public school districts that offer
school quality higher than what is offered by some private schools
located in lower-quality public school districts, with quasi-prices in
those public schools higher than explicit tuition in lower-quality pri-
vate schools elsewhere. The previous hierarchy of private schools dom-
inating public schools thus continues within a school district but not
necessarily across school districts.
have on the costs and benefits of accessing quality schools for parents.
But once the link to housing markets is taken into account, these con-
siderations may ultimately be outweighed by considerations related to
capital gains and losses that homeowners are likely to experience in
an environment in which the private sector has been mobilized by un-
bundling housing and schooling choices. The desire of policy makers
to mobilize private schools to enhance educational opportunities there-
fore runs into a political constraint due to the effects of such policies for
the distribution of homeowner wealth (Brunner, Sonstelie, and Thayer
2001).
This suggests that, as different methods of targeting vouchers
funded by higher-level governments are considered, there is an inher-
ent bias toward targeting vouchers to low-income households if poli-
tics is disproportionately influenced by resources of higher-income
households. Such targeting in essence isolates the competitive effect
from a more active private sector to low-income areas—thus reduc-
ing the impact on homeowner wealth through changes in housing
prices. While the most effective way of spreading a competitive effect
throughout the public school system may therefore involve geographic
targeting, it seems unlikely that such targeting by higher-level govern-
ments is politically feasible without other offsetting public policies. At
the same time, such targeting could emerge ‘‘from the bottom up’’—
with districts such as inner cities providing vouchers to residents of
the district in order to draw residents from suburbs back into cities.
Table 3.1
Public School Quality as (Nontargeted) Vouchers Are Introduced
Voucher amount
$0 $1,000 $2,500 $4,000 $5,000
Cream skimming only
Poor district 69.97 68.05 65.82 39.83 ***
Middle district 100.00 98.80 89.43 78.93 44.59
Wealthy district 126.31 120.22 112.96 93.19 80.27
Cream skimming and pedagogical targeting
Poor district 70.36 76.46 80.55 81.61 76.85
Middle district 100.00 101.52 104.96 105.99 101.55
Wealthy district 131.05 130.11 129.67 131.74 127.02
Cream skimming and competitive resource efficiency
Poor district 65.72 67.42 69.81 71.08 71.74
Middle district 100.00 101.83 104.90 107.68 109.75
Wealthy district 124.64 126.96 128.23 131.24 132.59
Source: Adapted from tables 5c and 6a in Nechyba (2003a). School quality is normalized
to be equal to 100 in the middle-income district in the absence of vouchers.
66 Thomas J. Nechyba
3.7 Conclusion
This paper suggests that private schools must operate with some
competitive advantages relative to public schools in order to attract
households—and that the nature of these advantages is likely to shape
our view of how the private sector can be most effectively mobilized to
advance academic achievement and other social goals. Rather than
asking whether competition is desirable, the discussion suggests more
nuanced policy questions asking what kinds of policies are most likely
to advance the aims of policy makers depending on the underlying
economic realities. Throughout, it is important to realize that, at least
Mobilizing the Private Sector in the United States 67
Notes
1. Other policies aimed at mobilizing the private sector include elements of the charter
school and home schooling movement, support for privately funded enrichment pro-
grams, Saturday and Sunday programs, Internet supplements to traditional schooling,
industry partnerships, etc.
2. Yet another component of the overall equilibrium that is not emphasized in this chap-
ter involves equilibrium in the teacher labor market. See, for instance, Loeb and Page
(2000).
3. In other contexts, such as some of the European systems, access to different types of
public schools is based on academic achievement—making the ‘‘ability tracking’’ model
of section 3 a more relevant model than the quasi-public school model discussed here.
68 Thomas J. Nechyba
4. Sometimes some degree of choice within a district exists, but even that is often subject
to capacity constraints that cause those living close to a school within the district to have
the right to attend and those that live closer to another school excluded by those con-
straints or by transportation costs involved in getting to the alternative school.
5. The public school in the poor district actually ceases to exist when the voucher level
reaches $5,000, the minimum per pupil spending level assumed for a school to exist. The
more dramatic drops in quality in each district take place when private school attendance
in the district increases sufficiently to ‘‘tip’’ the political support for public schools.
References
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4 The Practice of Public-Private Partnerships
Norman LaRocque
Education sectors the world over are facing a number of social, educa-
tional, and economic challenges. Many governments have responded
to these challenges by introducing market-based education policies
emphasizing choice, managerial autonomy, and accountability for
results. This chapter provides an overview of international examples
of government agencies contracting for the delivery of education ser-
vices, including contract schools, charter schools, voucher-type pro-
grams, and infrastructure public-private partnerships. It concludes by
drawing some tentative lessons for the design and implementation of
contracting in the education sector.
Contracting has been widely used by government agencies to pro-
cure a range of services such as transportation, refuse collection, and
fire protection. While contracting for social services is less common,
private organizations (and particularly not-for-profit organizations)
have long played a role in the delivery of services such as child care,
employment counseling, and welfare support. In the education sector,
governments have made use of contracting with the private sector for
the delivery of auxiliary services such as school transport, food ser-
vices, and cleaning. Contracting for the delivery of core education
services is at a much earlier stage of development. While such contract-
ing is not widespread, there are a number of examples from around the
world.
Contracting can be defined as a purchasing mechanism used to ac-
quire a specified service, of a defined quantity and quality, at an
agreed-on price, from a specific provider, for a specified period.1 In
practical terms, contracting involves a government agency entering
into an agreement with a private provider to procure an education ser-
vice or bundle of services in exchange for payment.
72 Norman LaRocque
Table 4.1
Typology of Arrangements for Service Delivery in Education
Who chooses Who manages Who provides Who employs
Delivery arrangement service? service? infrastructure? staff?
Government provision Government Government Government Government
Management model:
n Pure management Government Private sector Government Government
contract
n
Operational contract Government Private sector Government Private sector
Service delivery model:
n
Core services Government Private sector Private sector Private sector
n
Non-core services Government Private sector Private sector Private sector
Infrastructure PPPs Government Private sector Private sector Core staff ¼
model public sector
Non-core
staff ¼ private
sector
Private sector provision Consumer Private sector Private sector Private sector
Figure 4.1
EMO-managed Schools and Enrollments, United States, 1998–99 to 2005–06
Source: Molnar et al. (2006, 3)
followed or standards are not met. At the end of the charter term, the
authorizing agency may renew the school’s contract.
The first charter school law was passed in 1991 in Minnesota, with
the first charter school opening the following year. The number of
charter schools has increased steadily since the early 1990s. There are
currently about 4,000 charter schools serving over one million students
in forty states and Washington, D.C. State charter school laws differ
significantly in terms of their support for charter schools. Charter laws
vary considerably by state and about one-fifth of states do not have
any charter school law. Not all charter school laws are created equal
and the regulatory framework is critical to the role and effect of charter
schools. Approximately one-half of states with charter school laws
have laws that are considered ‘‘strong’’ or ‘‘medium’’ in that they pro-
vide charter schools with more management freedom, limit red tape,
allow community and for-profit providers to operate, and provide
multiple avenues for charter authorization.5
Figure 4.2
Enrollments in Concession Schools, Bogotá, 2000–04
Source: Secretary of Education, Bogotá
Figure 4.3
Number of ESC Grantees and Participating Schools, 1986–87 to 2005–06
Source: Fund for Assistance to Private Education and Department of Education
n
the private sector invests in school infrastructure and provides re-
lated non-core services (e.g., building maintenance);
n
arrangements between the government and the private sector are
governed by long-term contracts—usually twenty-five to thirty years.
Contracts specify the services the private sector has to deliver and the
standards that must be met;
n
service contracts are often bundled, with the provider taking on sev-
eral functions such as design, construction, and maintenance; and
n
contract payments are contingent upon the private operator deliver-
ing services to an agreed performance standard.
These studies provide some tentative lessons on the design and im-
plementation of education contracting programs. In particular, they
highlight the importance of several success factors in contracting,
including the existence of an enabling policy and regulatory environ-
ment and a strong legal framework. The government’s role should be
to spell out the desired outputs and performance standards, set penal-
ties for failure to achieve and rewards for success, and then leave pro-
viders to decide the best way of organizing themselves to deliver the
required outputs to the specified standard.
The establishment of appropriate performance measures is a critical
element of contract design.8 Performance indicators may be quantita-
tive (e.g., test scores) or qualitative (e.g., parental satisfaction) in nature
and provide an objective basis for determining whether the service
provider has met the agreed terms and conditions of the contract.
They may also be linked to provider compensation, with providers
who meet the required standard rewarded through higher payments,
while those who fail to do so are penalized—either through reduced
payments or contract termination.
The contracting approach to government procurement of educa-
tion services places much more significant demands on government
agencies than do traditional methods of government procurement. The
need to specify, monitor, and enforce complex contracts means that
contracting agencies must have the information, skills, and capabil-
ity required to manage such programs. Splitting the purchaser and
provider roles within the relevant regulatory authority can help to
minimize conflicts between the government’s role as purchaser of
education services and its role as provider of education through the
public school system. Use of an independent organization to evaluate
the contractor’s performance can ensure further neutrality in the moni-
toring and enforcement of contracts.
A transparent and competitive bidding process is most likely to
build community acceptance for the use of contracting, and is most
likely to deliver better value for money, reduce the scope for corrup-
tion, and encourage growth in the private education services market.
A staged process ensures good specification of desired services and
expected outcomes and a more rigorous assessment of provider capa-
bility.9 Contract length can be tailored to the particular service being
contracted for. A range of factors must be considered in determining
appropriate contract length, including the appropriate period for as-
sessing performance, the maturity of the contracting regime, and the
86 Norman LaRocque
4.5 Conclusion
Notes
References
Brook, P. J., and M. Petrie. 2001. Output-based aid: Precedents, promises, and challenges.
In Contracting for public services: Output-based Aid and Its Applications, ed. P. J. Brook and S.
Smith, 4. Washington, D.C.: World Bank.
Bulkley, K., L. Mundell, and R. Morgan. 2004. Contracting Out Schools: The First Year of the
Philadelphia Diverse Provider Model. Philadelphia: Research for Action.
Center for Comprehensive School Reform and Improvement. 2005. Contracting With Ex-
ternal Education Management Providers. Washington, D.C.
Center for Education Reform. 2006. Charter Schools Today: Changing the Face of American
Education Part 2: Raising the Bar On Charter School Law, 2006 Ranking & Scorecard, 9 th Edi-
tion. Washington, D.C.
Gill, B. et al. 2007. State Takeover, School Restructuring, Private Management, and Student
Achievement in Philadelphia. Santa Monica: RAND Corporation.
Hentschke, G. C., S. Oschman, and L. Snell. 2003. Trends and Best Practices for Education
Management Organizations. San Francisco: WestEd.
Molnar, A. et al. 2006. Profiles of For-Profit Education Management Companies 2005–2006.
Eighth Annual Report. Tempe: Arizona State University.
New South Wales Treasury. 2005. New Schools Privately Financed Project: Post Implementa-
tion Review. Sydney: Office of Financial Management.
OECD. 1999. Performance Contracting: Lessons from Performance Contracting Case Studies, A
Framework for Public Sector Performance Contracting. Paris.
Patrinos, H. A., and N. LaRocque. 2007. Enhancing Accountability in Schools: What Can
Choice and Contracting Contribute. Washington, D.C.: World Bank.
Rhim, L. M. 2005. School Restructuring in Philadelphia: Management Lessons from 2002 to
2005. ECS policy brief. Denver: Education Commission of the States.
Rodriguez, A. 2002. Executive summary. In Case Study: Public School Concession Model of
Bogotá Colombia. Washington, D.C.: World Bank.
Savas, E. S. 2000. Privatization and Public-Private Partnerships. New York: Chatham House
Publishers/Seven Bridges Press.
Swope, J., and M. Latorre. 2000. Fe y Alegrı́a Schools in Latin America: Educational Commu-
nities Where the Pavement Ends. Santiago: Centro de Investigación y Desarrollo de la Edu-
cación, Santiago.
Taylor, R. J. 2003. Contracting for health services. In Private Participation in Health Services
Handbook, ed. A. L. Harding and A. S. Preker, 157–219. Washington, D.C.: World Bank.
World Bank. 2005. Colombia: Contracting Education Services. Report No. 31841-CO. Wash-
ington, D.C.: World Bank.
II Traditional Forms of School Choice
5 Public-Private Schools in Rural India
Table 5.1
Private School Prevalence by State
% of % of
villages villages
with a with a
private private
State school State school
India has access to a private school in the same village in which they
live. But there is sharp variation in the prevalence of private schools
across states, with Gujarat and Maharashtra having almost no rural
private schools, while over 50% of the sampled villages in Rajasthan,
Bihar, Uttar Pradesh, Punjab, and Haryana have a private school in
the same village (table 5.1). Recent household-survey-based evidence
presented in the Annual Status of Education Report (2005) confirms
the increasing role of private schooling in rural India by showing that
15.5% of children aged 6–10 in rural India attend a private school and
that over 20% of the children in this group attend a private school in
several states.8
Table 5.2 presents results from ordinary least squares (OLS) regres-
sions where the binary variable of private-school existence (at the
village level) is regressed on potential predictors of private school exis-
tence. The first column includes the log of the village population, the
log of the mean pupil-teacher ratio in the public schools in the village,
and the mean level of teacher absence9 in the public schools in the vil-
lage. The second column includes state fixed effects. The third column
replaces the state dummies with the log of state per capita GDP. The
fourth column includes district-level estimates of mean per capita con-
sumption calculated from the fifty-fifth round of the National Sample
Survey,10 and the fifth column includes district-level consumption as
well as state fixed effects.11
96 Karthik Muralidharan and Michael Kremer
Table 5.2
Correlates of Private School Existence at the Village Level
Dependent variable ¼ 1 if village has a private school, 0 if it does not
Figure 5.1
Public-Private Schools in Rural India 99
Table 5.3
Absence Rate by School Type
Difference relative to government-run
schools
(1) (2) (3) (4) (5)
Village/ Village/
Number No town town fixed
Teacher of obser- fixed fixed effects þ
absence vations effects effects controls*
Government- 25.2% 34,493 — — —
Run Schools
Non-formal 26.9% 393 1.7% 2.7% 2.4%
Schools
Private Aided 20.1% 3,371 C5.1% 1.3% 0.4%
Schools
Private Schools 22.8% 9,075 2.4% C3.8% C7.8%
Notes: * Controls include a full set of visit-level, teacher-level, and school-level controls
Bold numbers indicate significant differences at the 1% level
Figure 5.2
Private School Formation/Enrollment over Time (Cumulative distribution function)
Table 5.4
Private versus Public School Facilities
Difference Difference
with state with village
Public Private Difference fixed effects fixed effects
infrastructure index between private and public schools, but the results
with state and with village fixed effects suggest that conditional on
being in the same village, private schools have poorer facilities and
infrastructure than the public schools.
Table 5.5
Sources of Private School Competitive Advantage
Difference Difference
with state with village
Public Private Difference FEs FEs
Mean total enrollment 141.9 98.3 43.6*** 49.6*** 80.7***
Mean number of teachers 3.6 5.2 1.6*** 1.48*** 0.87***
Pupil-teacher ratio 43.43 19.16 24.3*** 29.6*** 34.43***
Log pupil-teacher ratio 3.583 2.783 0.800 0.931*** 1.045***
Multigrade teaching 71% 51% 0.20*** 0.20*** 0.11***
Average grade of starting 2.62 1.67 0.95*** 1.27*** 1.35***
teaching English
Fraction of teachers engaged 44% 50% 5.7%*** 8.6%*** 9.3%***
in teaching activity
Average student attendance 64.4% 75.7% 11.3%*** 12.1%*** 13.4%***
Notes: Significance level: *** 1%; ** 5%; * 1%
logs, we find that the PTR of a public school is 2.85 times higher than
the PTR of a private school in the same village. The lower PTR in the
private schools also translates into lower levels of multigrade teaching
(the practice of one teacher simultaneously teaching multiple grades in
the same room).
Field interviews with parents of children attending rural private
schools suggest that two of the major attractions of private schools are
the fact that they start teaching English early and that there is more
teaching activity in these schools. The last two rows of table 5.5 con-
firm that these differences do exist. Private schools on average start to
teach English a whole grade earlier, with the effect being even more
pronounced with state and village fixed effects. Private schools also
have significantly more teaching activity going on, and again the mag-
nitude of the difference increases with state and village fixed effects.
One reason for this is likely to be that head teachers in private school
are much more likely (and able) to take disciplinary action against
shirking teachers than their counterparts in the public schools. We
found that only one head teacher in the nearly 3,000 public schools we
surveyed reported ever dismissing a teacher for repeated absence.14
On the other hand, 35 head teachers in a sample of around 600 private
schools reported having at some point dismissed a teacher for repeated
absence, and therefore shirking teachers in the private sector are
around 175 times more likely to have disciplinary action taken against
them!
Public-Private Schools in Rural India 103
If we consider the cases with village fixed effects (which is the rele-
vant case when considering the choice faced by a parent with regard
to choosing between a private and public school in the same village),
we see that combining the effects of a lower pupil-teacher ratio and a
higher level of teaching activity leads to a child in the private school
having three to four times more ‘‘teacher contact’’ time than in the pub-
lic school.
The better performance of the private schools is also reflected in the
fact that student attendance rates are also substantially higher in pri-
vate schools (as seen in the last row of table 5.5). Pupil attendance is
11.3% higher in the all-India sample, and 13.4% higher with village
fixed effects. If we think that the true measure of the relative role of the
private and public sectors is attendance as opposed to enrollment, then
the true share of rural children taught in the private sector will be even
higher after adjusting for the differential attendance rates.
Table 5.6
Teacher Characteristics
Difference Difference
with state with village
Public Private Difference FEs FEs
Average age of teachers 40.28 29.61 10.67*** 11.92*** 12.35***
Fraction of college 39% 49% 0.10*** 0.03* 0.01
graduates among teachers
Fraction of teaching 80% 28% 0.52*** 0.61*** 0.64***
certificate holders among
teachers
Fraction of female teachers 36% 41% 0.05 0 0.02
Fraction of local teachers 23% 46% 0.23*** 0.26*** 0.24***
Notes: Significance level: *** 1%; ** 5%; * 1%
teachers are being paid a much lower wage and are often looking at
other long-term options, there is little ‘‘efficiency wage’’ cost of being
fired. Thus, if pursuing other opportunities requires a certain level of
absence (and an accompanying probability of action being taken), this
is a tradeoff that the private school teachers probably are willing to
make. However, despite the low wages, we see that private schools
have lower teacher absence and higher teaching activity than the
public schools—especially in the same village.
Table 5.7
Household Characteristics
Difference Difference
with state with village
Public Private Difference FEs FEs
Average number of rooms 2.423 2.914 0.742*** 0.574*** 0.560***
in house
Average fraction of children 0.169 0.212 0.043*** 0.041*** 0.066***
taking tuition
% of literate fathers 0.71 0.804 9.4%*** 0.118*** 0.146***
% of literate mothers 0.445 0.542 9.7%*** 0.122*** 0.163***
% of fathers with education 0.242 0.432 19%*** 0.208*** 0.236***
10 grades or higher
% of mothers with education 0.087 0.197 11%*** 0.117*** 0.129***
10 grades or higher
Dixon (2003), who mention that the majority of private schools in India
cater to the poor (though their observation is based on an urban study)
and the findings reported by Andrabi, Das, and Khwaja (2002) that pri-
vate schools in rural Pakistan are affordable to middle- and even low-
income groups.
5.4 Conclusions
Table 5.8
Performance Differentials of Private Schools
Regression of mean student test score (in std. deviations) on school type and controls
Acknowledgments
Notes
4. See appendix A of Kremer et al. (2004) for a detailed description of the sampling
procedure.
5. Covering grades one to five in most states, and grades one to four in some states,
depending on the classification of primary schools in the concerned state. The focus of
the study was completely on primary schools, and so the usage of the term school should
be understood to mean primary school unless stated otherwise.
6. Unrecognized schools are also more recently established, with an average age of 7.6
years as opposed to recognized private schools with an average age of 9.9 years. The frac-
tion of schools in this sample that report being run by a religiously oriented group is
quite small (15 out of 592 or 2.5% of schools). Schools run by religiously oriented groups
form a larger share of the private-aided schools that get government grants and are not
allowed to charge tuition fees (33 out of 152 or over 20%).
7. Since the survey was done across several states with different languages, the test was
weighted towards math as opposed to language. The test was short but the items used
had been pretested for validity. The test consisted of 12 arithmetic questions and 2 verbal
questions (that asked the students names in the local language and English respectively).
See appendix B of Kremer et al. (2004) for a detailed description of the test as well as the
procedure by which it was administered, graded, and coded.
8. These states include Andhra Pradesh, Haryana, Kerala (including private aided
schools), Punjab, Rajasthan, and Uttar Pradesh.
9. A teacher was considered to be absent if, at the time of a random visit during school
hours, he or she could not be found anywhere in the school premises. See Chaudhury
et al. (2006) and Kremer et al. (2005) for details on how absence and teaching activity
were measured and on the various steps we took to measure these accurately.
10. We thank Petia Topalova for making her calculations of district-level consumption
estimates available to us. See Topalova (2005) for details on these calculations.
11. Robust standard errors clustered at the state level are reported for specifications with
state-level right-hand-side variables and likewise for district-level variables, where the
standard errors are clustered at the district level.
12. The approximate exchange rate at the time of publication is Rs45 ¼ U.S.$1.
13. Direct data on teacher salaries in Andhra Pradesh has been collected in a different
ongoing study by one of the authors. The salary figures would be even higher if we
included benefits, the largest portion of which is the present value of a defined benefits
retirement pension. Private school teachers typically receive no benefits.
14. See Kingdon and Muzammil (2001) for more details on the power of public-school
teacher unions and how it has evolved over the years (based on a case study of the state
of Uttar Pradesh).
References
Andrabi, Tahir, Jishnu Das, and Asim Khwaja. 2002. The rise of private schooling in Paki-
stan: Catering to the urban elite or educating the rural poor? Mimeo. Kennedy School of
Government, Harvard University.
Annual Status of Education Report (ASER). 2005. Mumbai: Pratham Resource Center.
Public-Private Schools in Rural India 109
Bashir, Sajitha. 1994. Public versus private in primary education: Comparison of school
effectiveness and costs in tamilnadu. PhD dissertation, London School of Economics.
Chaudhury, Nazmul, Jeffrey Hammer, Michael Kremer, Karthik Muralidharan, and F.
Halsey Rogers. 2006. Missing in action: Teacher and health worker absence in developing
countries. Journal of Economic Perspectives (winter): 91–116.
De, Anuradha, Claire Noronha, and Meera Samson. 2001. India: Private schools and uni-
versal elementary education. South Asia Education Sector, Technical Working Paper No.
3. World Bank, Washington, D.C.
De, Anuradha, Manabi Majumdar, Claire Noronha, and Meera Samson. 2002. Private
schools and universal elementary education. In India Education Report—A Profile of Basic
Education, ed. R. Govinda. New Delhi: Oxford University Press.
Govinda, R., and Varghese, N. V. 1993. Quality of primary schooling in India: A case
study of Madhya Pradesh, International Institute for Educational Planning, National In-
stitute of Educational Planning and Administration. New Delhi: NIEPA.
Kingdon, Geeta. 1996a. The quality and efficiency of private and public education: A case
study of urban India. Oxford Bulletin of Economics and Statistics 58, no. 1: 57–81.
Kingdon, Geeta. 1996b. Private schooling in India: Size, nature and equity effects. Eco-
nomic and Political Weekly 31, no. 51 (December).
Kingdon, Geeta Gandhi, and Mohd Muzammil. 2001. A political economy of education
in India- I: The case of UP. Economic and Political Weekly 36, no. 32 (August: 11–18).
Geeta G. Kingdon
with issues of the potential endogeneity of school inputs has been due
to the ubiquitous problems of lack of credible instruments and lack
of panel or experimental data, though some recent studies have used
randomized experiments to study the impact of particular educational
interventions (Banerjee et al. 2005; Duflo and Hanna 2005; Muralid-
haran and Sundararaman 2006; Pandey, Goyal, and Levine 2006) and
others have used statistical techniques such as propensity-score match-
ing methods ( Jalan and Glinskaya 2002), instrumental variable meth-
ods (Kingdon and Teal 2007), pupil fixed-effects approaches (Kingdon
2006), and treatment effect models (Schmid 2006).
The first section of this chapter presents evidence on the relative
sizes of private, aided, and government schooling sectors in India. The
second section examines the relative effectiveness and per pupil costs
of private and public schools in India and the final section discusses
India’s experience with public-private partnerships in education.
6.1 The Relative Sizes of the Private and Public Schooling Sectors
The very first fact about the private and public schools in India is that
even their relative enrollment shares are not known with a degree of
accuracy. This is mainly due to a failure to include all types of schools
in official data collections but also partly due to exaggeration of enroll-
ments in publicly funded schools in these data (Kingdon 1996a; Drèze
and Kingdon 1998).
Table 6.1
Enrollment Share of Private Schools, 1993–2006
Official Household Official Household
published survey published survey
data data data data
Area School level 1993 1993 2002 2006
All India
Rural Primary 2.8 10.1 5.8 19.5
Junior/middle 6.5 7.9 11.1 20.4
Secondary 6.8 10.1 14.3 22.8
Urban Primary 25.7 26.2* 28.9 NA
Junior/middle 18.8 15.4* 39.1 NA
Secondary 11.5 11.2* 32.4 NA
Uttar Pradesh
Rural Primary 8.8 30.7 15.6 30.5
Junior/middle 28.3 23.3 31.0 35.0
Secondary 10.9 14.4 41.0 37.8
Urban Primary 53.3 49.7* 64.1 NA
Junior/middle 29.6 25.1* 48.2 NA
Secondary 5.3 11.3* 29.7 NA
Source: 1993 official data computed from Sixth All India Education Survey (NCERT 1998).
2002 official data computed from Seventh All India Education Survey, available at hhttp://
gov.ua.nic.in/NScheduleData/main3.aspxi. Rural household survey figures for 1993 are
based on the author’s calculations from 1993–94 NCAER survey. The urban household
survey figures marked * are taken from 1995–96 National Sample Survey published in
NSSO (1998, A69–82). Household survey figures for 2006 for rural India taken from
ASER2006 (Pratham 2007).
Note: In official data I have taken grades 9–12 as secondary school, i.e., corresponding to
students aged about 15–18 years old. ASER household survey collected data only on chil-
dren up to age 16, so children aged 7–10, 11–14, and 15–16 are assumed to be in primary,
middle, and secondary school respectively. In ASER, 18.6% of all children aged 7–10
were in private school and 4.6% were not in school, thus the private school share
of total school enrollment is taken to be ð18:6=ð100 4:6Þ 100 ¼ 19:5%Þ and similar cal-
culations were performed for middle and secondary school ages.
schools but that, according to household survey data for the same year,
10.1% of all rural Indian 6–10-year-old school attendees went to a pri-
vate school, a figure more than three times as high as the official esti-
mate.3 In rural Uttar Pradesh, official estimates for primary education
put the 1993 enrollment share of private schools at 8.8% but according
to the 1993–94 National Council of Applied Economic Research
(NCAER) household survey, the actual share was 30.7%, again more
than three times as high as the official estimate. By the time of the Pub-
lic Report on Education (PROBE) survey in 1996, 36% of all primary-
age students (6–11-year-olds) in rural Uttar Pradesh attended private
School-Sector Effects on Student Achievement in India 115
schools (PROBE Team 1999). Table 6.1 also shows that the enrollment
share of private schools at the primary level rose from 2.8% in 1993 to
5.8% in 2002. If the extent of underestimation of private enrollment in
2002 is the same as in 1993, then the true private school share of total
primary enrollments in rural India is three times as high as 5.8%, that
is, about 17%. This is close to the only recent national estimate avail-
able: the ASER-2006 national sample survey of over 330,000 house-
holds across 15,800 villages finds that 19.5% of school-going rural 7–
10-year-olds attended private schools in 2006.4 Table 6.1 shows that in
urban India, private schools’ share of total enrolment in 2002 was be-
tween about 30 and 40% at different levels of education, though being
an official figure, this ignores the numerous enrollments in private
unrecognized schools.
Some reasons for the large discrepancy between household survey
estimates and official estimates of the size of the private schooling sec-
tor in India are discussed in Kingdon (1996a) and Drèze and Kingdon
(1998): First, government and aided school teachers have an incentive
to over-report their enrollments when there is low demand for such
schools (since a school with falling rolls would lose teachers), and this
reduces the apparent enrollment share of private schools; second, as
previously stated, all official school ‘‘censuses’’ are carried out only in
the government-recognized schools, and in most Indian states there is
no requirement on private primary schools to be registered, let alone
government-recognized. It seems that rural private schools in particu-
lar do not easily get government recognition, for which many condi-
tions need to be satisfied. As Kingdon (1996a) says, given the exacting
conditions for and scant rewards of recognition, it is not surprising that
many private primary schools remain unrecognized.
The true size of the private schooling sector is greatly underesti-
mated in official data due to enumerating only the recognized schools.
Household survey data give a much more accurate picture since
parents have no incentives to over-report enrollment in publicly
funded schools or to report enrollment in recognized schools only.
Household survey data in table 6.1 suggest the extent to which the
enrollment share of private schools in primary education is underesti-
mated in official data—namely by about 67% in rural areas. Muralid-
haran and Kremer (2006) find that in their national survey of 20 states,
51% of all private primary schools were unrecognized. This accords
with evidence from individual states in other studies.5
116 Geeta G. Kingdon
Table 6.2
Share of Recognized Private Schools in Total Enrollment Increase, by Region, Level of
Education, and Time Period
1978–86 1986–93 1993–2002
Rural
Primary 2.8 18.5 24.4
Middle 7.2 12.8 23.2
Secondary 5.8 15.8 30.9
Urban
Primary 56.8 60.5 95.7
Middle 35.7 31.8 71.7
Secondary 17.7 17.7 46.7
Rural & Urban
Primary 13.5 35.3 38.9
Middle 15.0 21.4 37.8
Secondary 10.7 16.8 38.4
Source: Author’s own calculations based on enrollment by school management type in
the All India Education Surveys for various years (NCERT 1982, 1992, 1998, 2006). See
table 6.A.1 for the underlying urban data.
School-Sector Effects on Student Achievement in India 117
Table 6.3
Raw and Standardized Achievement Scores and Relative Advantage Points by Sector
and Subject: G, PA, and PUA Schools
(A) (B)
Achievement points Achievement advantage points
G PA PUA PUA-G PUA-PA PA-G
(a) (b) (c) (c a) (c b) (b a)
Mathematics
Raw 8.97 8.36 17.09 8.12 8.73 0.61
Standardized (d) 11.38 10.09 12.80 1.42 2.71 1.29
[18] [31] [211]
Reading
Raw 9.77 10.86 16.85 7.08 5.99 1.09
Standardized (e) 13.78 13.73 13.82 0.04 0.09 0.05
[1] [2] [5]
Achievement
Raw 18.74 19.22 33.94 15.20 14.72 0.48
Standardized (d þ e) 25.16 23.82 26.62 1.46 2.80 1.34
[10] [19] [279]
OLS standardized 20.57 22.60 27.56 6.99 4.96 2.03
achievement points
Note: The maximum marks possible in the math and reading tests were 36 and 29 respec-
tively. Thus, the maximum achievement mark was the total of the two, i.e., 65. The fig-
ures in brackets are the standardized achievement advantages as a percentage of the raw
achievement advantages. The negative signs imply achievement disadvantages.
where the ^bs are the estimated coefficient vectors in the three sectors
and X is a vector of mean values of the explanatory variables, averaged
over the entire sample. Now PUA schools’ achievement advantage
over G schools, for example, can be calculated as (6.3) (6.1), PA
schools’ relative advantage over G schools as (6.2) (6.1), and so on.
The achievement scores thus calculated and the relative achievement
advantages of different school types are presented in table 6.3.
Table 6.3, column B, shows that the unadjusted (raw) mean achieve-
ment advantage of private unaided schools over government and
aided schools in all subjects falls greatly when personal endowments
and sample selectivity of pupils are controlled for. For example, PUA
schools’ raw mathematics-score premium over G schools of 8.12 points
falls to 1.42 points (still a large achievement advantage of 0.21 standard
deviations). This implies that, of the PUA schools’ mathematics advan-
tage of 8.12 points vis à vis G schools, 82% is explained by student in-
School-Sector Effects on Student Achievement in India 121
take and only 18% can be attributed to school influences. The PUA
schools’ raw mathematics advantage over PA schools falls from 8.73
points to 2.71 points, so that 31% of the observed PUA math advantage
is due to school-related factors and 69% due to student intake. The pre-
dicted mathematics score of a child in a PUA school (12.80 points) is
27% higher than her predicted math score in a PA school, where it
would be 10.09 points. In other words, PUA schools are 27% more
effective than PA schools in their math teaching.8
G schools’ tiny mathematics advantage over PA schools increases
after controls, suggesting that G schools are more effective in impart-
ing numeracy skills than PA schools. It is notable that all three school
types are roughly equally effective in imparting reading skills. The raw
reading-score premiums virtually disappear when student background
and selectivity are controlled.
The finding in econometric studies—that private schools are gener-
ally more effective than public schools in India—is broadly corrobo-
rated by the qualitative findings of the PROBE report, based on a
survey of 242 villages in 5 north Indian states (PROBE Team 1999).
The authors emphasize low teaching activity in public schools. The re-
port states that the extreme cases of teacher negligence were ‘‘less dev-
astating than the quiet inertia of the majority of teachers. . . . In half of
the sample schools, there was no teaching activity at the time of the
investigators’ visit. . . . Inactive teachers were found engaged in a vari-
ety of pastimes such as sipping tea, reading comics, or eating peanuts,
when they were not just sitting idle. Generally speaking, teaching
activity has been reduced to a minimum in terms of both time and
effort. And this pattern is not confined to a minority of irresponsible
teachers—it has become a way of life in the profession’’ (PROBE Team
1999, 63). While it does not aim to make a case for private schools, the
PROBE report contrasts such teacher behavior in government schools
with that in private schools. It notes (p. 64) ‘‘the high level of teaching
activity in private schools, even makeshift ones where the work envi-
ronment is no better than in government schools.’’ Again on page
102 the report notes, ‘‘In most of the private schools we visited,
there was feverish classroom activity.’’ Also: ‘‘This feature of private
schools brings out the key role of accountability in the schooling
system. . . . In a government school the chain of accountability is
much weaker as teachers have a permanent job with salaries and
promotions unrelated to performance. This contrast is perceived with
crystal clarity by the vast majority of parents’’ (p. 64). Other authors
122 Geeta G. Kingdon
Table 6.4
Salary Expenditure as a Proportion of Total Education Expenditure
Recurrent as a
percentage of
total educational Salary as a percentage of total recurrent
Year expenditure educational expenditure (%)
Primary Junior Secondary
1960–61 74.7 87.9 85.1 72.3
1965–66 79.4 90.7 89.2 75.3
1969–70 85.0 92.3 90.4 85.6
1974–75 87.1 96.6 94.3 87.1
1981–82 94.8 96.7 93.8 89.9
1987–88 97.3 NA NA 90.7
Source: Table 13.13 from Kingdon and Muzammil (2003).
Note: The system of reporting changed after 1988.
too have noted lax attitudes and low teacher accountability (Weiner
1990). This, in turn, seems to have its roots, at least partly, in teachers’
own demands for a centralized education system (Kingdon and
Muzammil 2003).
It is thought that in explaining the increased popularity of pri-
vate education, the breakdown of government schools is often more
decisive than parental ability to pay. ‘‘In rural Himachal Pradesh, for
instance, there is a good deal of purchasing power but the government
schools function well, so that there are few private schools. In central
Bihar, by contrast, poverty is endemic, yet private schools can be found
in many villages due to the dysfunctional state of government schools’’
(PROBE Team 1999, 102).
Table 6.5
Annual Per-Pupil Expenditures by School Type (Rupees)
Recurrent expenditure per pupil
Salary as a percentage
School type Salary Non-salary Total of total expenditure
Government (G) 1958.40 50.00 2008.40 97.5
Aided (PA) 1780.93 46.87 1827.80 97.4
Private (PUA) 735.94 262.96 998.90 73.7
Source: Kingdon (1994), chapter 6.
Table 6.6
Average Monthly Salary of Teachers by School Type
School type Average gross salary of sample
( junior schools) teachers (rupees per month)
Evidence from Indian Studies on Private Unaided and Government School Teachers’ Average Monthly Salaries
Kansal’s Govinda/ Jain’s Bashir’s Singh/ Murali-
PUA pay as a Kingdon’s study Varghese study study Sridhar dharan
School level percentage of study 1994 1990 1993 1988 1994 2002 & Kremer
Lucknow Many
district City of 5 districts Baroda districts 2 districts
of Uttar New of Madhya district of of Tamil of Uttar 20 states
Pradesh Delhi Pradesh Gujarat Nadu Pradesh of India
Primary/junior level G pay 42 39 49 47 47 20 20
PA pay 43 39 66 — 50 — —
Secondary level G pay 74 76 — — — — —
PA pay 79 76 — — — — —
Note: The Kingdon study sampled 182 teachers, Kansal 233 teachers, Govinda and Varghese 111 teachers, Bashir 419 teachers, and Singh and Srid-
har 467 teachers. We do not know the number of teachers sampled in Jain.
Sources: Jain (1988); Kansal (1990); Govinda and Varghese (1993); Bashir (1994); Kingdon (1994); Singh and Sridhar (2002); Muralidharan and
Kremer (2006).
Geeta G. Kingdon
School-Sector Effects on Student Achievement in India 125
Table 6.8
Unit Costs, Achievement, and Cost per Achievement Point (G, PA, and PUA Schools)
G PA PUA PUA:G PUA:PA PA:G
(a) (b) (c) (c/a) (c/b) (b/a)
Cost per student (C) 2008.00 1827.00 998.00 0.50 0.55 0.91
Predicted mathematics 11.38 10.09 12.80 1.13 1.27 0.89
score (M)
Cost per mathematics 176.00 181.00 78.00 0.44 0.43 1.03
point (C/M)
Predicted reading 13.78 13.73 13.82 1.00 1.00 1.00
score (R)
Cost per reading point 146.00 133.00 72.00 0.50 0.55 0.91
(C/R)
Predicted total score 25.16 23.82 26.62 1.06 1.12 0.95
(T ¼ M þ R)
Cost per score point 80.00 77.00 38.00 0.47 0.49 0.96
(C/T)
Source: Kingdon (1996).
ating the atmosphere in schools, we were told, has been the role of
teacher politicians and teachers’ organisations.’’
A further possible reason why aided schools—the Indian form of
educational PPP—perform no better than government schools in Uttar
Pradesh is that the government grant to aided schools is devoid of any
performance incentives. Despite the existence of certain rules and con-
ditions, the system of grants-in-aid in Uttar Pradesh is not linked to
the qualitative performance of schools. Even when the school’s grant-
in-aid was made conditional on satisfactory examination performance
of the school’s students, the pass rate was fixed at a paltry 45%—that
is, it was required that only 45% (or more) of the students pass the
high school exam (and a student needs to get a mere 33% average
grade across all subjects to pass high school)! Similarly, low standards
are required for the minimum number of days the school must be open
in order to remain eligible for grants. However, there is little monitor-
ing or verification of compliance with even these undemanding condi-
tions. On the whole, the system still leaves much to be desired and it is
not surprising because in practice, political maneuvers often overrule
the provisions laid down by the state government to sanction and reg-
ulate recurring and nonrecurring grants. The following observation of
Rudolph and Rudolph (1972, 105) with regard to the flouting of condi-
tions of grants-in-aid still holds: ‘‘these grants in aid are technically
conditioned upon the maintenance of certain academic and adminis-
trative standards, but in reality an educational entrepreneur who
enjoys political favour has little difficulty in establishing his institu-
tion’s qualification.’’
While the number of aided schools expanded tremendously in India
in the post-independence period, the system of grants-in-aid has re-
mained essentially the same as that introduced by the British 150 years
ago. By contrast, the British system of grants itself underwent revolu-
tionary changes and became more objective, particularly from the
1920s onward. What incentives can be built into public grants to pri-
vate schools is an area that deserves detailed study. A per-student (as
opposed to block) grant system may be desirable that relates a PPP
grant to various school performance indicators such as percentage of
total expenses spent on nonsalary costs (to encourage quality improve-
ments), percentage of total funds raised from nonfee sources such as
parental donations (to encourage equitable resource-generation), per-
centage of parents who are satisfied with the school (to encourage ac-
countability), and average number of students per class (to encourage
130 Geeta G. Kingdon
Madhya Pradesh, and Andhra Pradesh), private schools have also been
found to be generally more effective than government schools in
imparting learning, after controlling for student intake.
While aided schools—a form of public-private partnership in educa-
tion—are no more cost-effective than government schools in Uttar
Pradesh, this appears to be because over time they have become more
and more like government schools owing to aided school teachers’
successful lobbying for comparability of treatment vis à vis govern-
ment school teachers.
The draft Right to Education Bill proposes to introduce a new form
of public-private partnership in the form of a per-student subsidy to
private schools, but the implications of this measure have not been
vigorously debated yet. Nor have issues of school choice and competi-
tion via vouchers to families been considered in terms of their quality
and equity effects, as compared with the current PPP proposal in the
bill that intends to give funds directly to schools. The drawbacks of
voucher schemes including problems of implementation were dis-
cussed, noting that some of the same concerns would also apply to the
currently proposed form of PPPs in the draft bill and noting that equity
concerns may be addressed by making the voucher amount inverse to
family income.
It is critical to have a full national debate about the merits and
drawbacks of the draft bill’s proposed way of giving funds to private
schools, in comparison with alternative PPP designs. In such a discus-
sion, it would be useful to learn from the mistakes and successes of
other countries that have tried alternative schemes for allocating public
funds to private schools. Moreover, there may be a case to make for
introducing the proposed measures on a pilot basis in one part of the
country—to observe their effects for a specific period, and then to
hone and improve what will potentially be a far-reaching and long-
standing measure.
6.5 Appendix
Secondary
Government 1,808,870 2,679,760 3,996,181 5,282,214 8,70,890 34.3 1,316,421 44.6 1,286,033 21.6
Aided 2,687,164 3,906,889 5,016,267 6,905,070 12,19,725 48.0 1,109,378 37.6 1,888,803 31.7
Private 195,969 645,442 1,168,160 3,944,952 4,49,473 17.7 522,718 17.7 2,776,792 46.7
Total increase 25,40,088 2,948,517 5,951,628
in all types (x1) (x2) (x3)
Source: NCERT (1982) Fourth All India Education Survey of 1978–79; NCERT (1992) Fifth All India Education Survey of 1986–87, p. 1116–1138;
135
NCERT (1998) Sixth All India Education Survey of 1993–94; figures from the Seventh All India Education Survey of 2002–03 obtained from
hhttp://gov.ua.nic.in/NScheduleData/main3.aspxi
136 Geeta G. Kingdon
Notes
1. In the state of Uttar Pradesh, to gain government recognition a private school must be
a registered society, have an owned rather than a rented building, employ only trained
teachers, pay salaries according to government prescribed norms, have classrooms of a
specified minimum size, and charge only government-set fee rates. It must also instruct
in the official language of the state and not be situated within five kilometers of a govern-
ment school (Kingdon 1994, chapter 2).
2. For instance, the condition to charge only government school-tuition-fee rates is
now incompatible with the condition to pay the government-prescribed salary rates to
teachers, since government school-fee rates have been cut consistently since the 1960s
and were abolished altogether in the early 1990s in all elementary schools, and since
government-prescribed minimum salaries to teachers have risen inexorably over time:
Kingdon and Muzammil (2003, chapter 13) estimate that average teacher salary rates
rose by 5% per annum in real terms in the 22-year period between 1974 and 1996.
3. The two sources are not exactly comparable since some school-going 6–10-year-olds
may attend preprimary or upper primary grades, i.e., be over- or underaged for their
grade.
4. Although ASER merged aided and unaided private schools into a single category, pri-
vate, at the primary level, there are few aided schools in most states so that the private
enrollment rates in ASER can be taken to mean mostly private unaided school enroll-
ments. ASER2006 found that 20.4% of boys and 16.8% of girls enrolled in grades one to
eight attended private schools. This 21% gender gap suggests one way in which girls are
discriminated against, namely via being substantially less likely to be sent to private
schools than boys (see Kingdon 2005).
5. Aggarwal (2000) found that in his four surveyed districts of Haryana in 1999, there
were 2,120 private primary schools of which 41% were unrecognized. The PROBE survey
of 1996 in five north Indian states did a complete census of all schools in 188 sample vil-
lages. It found 41 private schools of which 63% were unrecognized. Mehta (2005) found
that in seven districts of Punjab, there were 3,058 private elementary (primary and ju-
nior) schools, of which 86% were unrecognized.
6. Take the example of the junior (or upper primary) education level in urban India. Be-
tween 1993 and 2002, according to table 6.A.1, junior enrollment increased by 3,412,949.
Out of this, the enrollment increase in private schools was 2,447,513, which is 71.7% of
the total increase in junior enrollments.
7. While Kingdon’s study is based on students in the final year of upper primary educa-
tion (grade eight), the other studies are based on students in the final year of lower
primary schooling (grades four or five). The methods used differed too. Bashir used hier-
archical linear modeling, Govinda and Varghese used OLS regression, and Kingdon used
sample selectivity correction models. The extent of controls for home background dif-
fered across the studies too, as well as whether school and teacher characteristics were
included in the achievement equations. Finally the costs of private and public schooling
were calculated differently in the different studies. In all three studies, the stratified ran-
dom samples of private schools consisted of schools of all types—nonprofit, proprietary,
faith-based, high-fee and low-fee schools, etc.
8. The correction for sample selectivity reduces the private school achievement advan-
tage over government schools by a very large amount (compared to the OLS results in
School-Sector Effects on Student Achievement in India 137
the last row of table 6.4). This large reduction is somewhat surprising since one would
not expect the unobserved factors (that remain after controlling for the child’s score in
the Raven’s test of ability and for a rich set of home background characteristics) to make
such a large difference to a child’s predicted achievement score.
9. For example, the ratio of (public primary school) teacher salary to per capita GDP in
the late 1990s was 1.15 in OECD countries, 4.4 in Africa, 2.3 in Latin America, and 2.9 in
Asia (UNESCO statistics, available at hportal.unesco.org/education/en/file_download
.php/i) but 8.5 in Uttar Pradesh, India (author’s own calculation).
10. The constitution of India guarantees representation to teachers in the Upper Houses
of state legislatures. Thus, uniquely among all worker groups, the teaching profession
has been singled out for this political privilege (see Kingdon and Muzammil 2003),
though Upper Houses now exist in only four large states in India.
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III Public Funding of Privately Managed Schools
7 School Vouchers in Colombia
Eric Bettinger
voucher program. Section 7.2 describes the data sources and methodol-
ogies used in these evaluations. Section 7.3 provides an overview of
evidence on the vouchers’ effectiveness after three years. Section 7.4
discusses the impact of the voucher on college entrance exams. Section
7.5 discusses possible mechanisms by which the voucher may have af-
fected student outcomes, including possible puzzles raised in the eval-
uation of the Colombian voucher project. Section 7.6 concludes.
Table 7.1
Student Characteristics by Voucher Status
Losers’ mean Difference by voucher status
(1) (2)
A. Bogotá 1995
Age 12.78 .137
[2.22] [.064]
Male .484 .004
[.016]
Has phone .874 .013
[.010]
Has valid ID .882 .010
[.010]
B. Bogotá 1992
Age 12.83 .093
[1.23] [.029]
Male .533 .042
[.010]
Has phone .397 .184
[.009]
Has valid ID .681 .053
[.009]
Notes: The table reports voucher losers’ mean and difference for voucher winners.
Standard deviations are in the first column for nonbinary variables. Standard errors are
included in the second column.
tery losers and its standard deviation. The second column shows the
difference between voucher winners and losers and the corresponding
standard error. In terms of gender and having a phone, we find no sig-
nificant differences between voucher winners and losers in the 1995 co-
hort. When we look at age, we find that younger students are more
likely to win the vouchers. This is significant and may suggest some
type of nonrandomness.
Even if the lottery was random, however, there may be some reasons
for this finding. First, in the Bogotá 1995 cohort, there are a couple of
significant outliers (e.g., a reportedly 92-year old fifth grader) among
voucher lottery losers. If we exclude these individuals or compare
medians rather than means, the difference in ages is much smaller. An-
other possible reason for this difference involves the accuracy of the
records. In most cases, we received two separate lists—one with all lot-
tery losers and another with lottery winners. One of our worries was
that information for lottery winners was updated while lottery losers’
148 Eric Bettinger
information was not. This could lead to more accurate ages, addresses,
and ID numbers. In the Bogotá 1992 lottery, there appears to be some
evidence of this. Voucher winners were about 5 percentage points
more likely to have a valid ID than voucher losers and about 18 per-
centage points more likely to have reported a phone number. How-
ever, in the Bogotá 1995 cohort, we did not find differences in the
likelihood that students had valid ID numbers.
As a final check on the data, we looked at the ‘‘win’’ rate of each of
the schools. In theory, schools should have had ‘‘win’’ rates among lot-
tery applicants from their school that were similar to the overall lottery
average. For the cohorts represented in table 7.1, there were few out-
liers, and the existing outliers were typically the result of a low number
of overall applicants to that school. However, in one cohort not in-
cluded in table 7.1, we found significant outliers. In the excluded co-
hort, we found one school in particular where 100% of applicants had
won the voucher. Given the school’s reputation as a politically con-
nected school and the large number of students who had applied, we
could not rule out nonrandomness.
Table 7.2
Descriptive Statistics by Voucher Status
Difference by
Losers’ mean voucher status N
(1) (2) (3)
A. Bogotá 1995
Age at time of survey 15.0 0.013 1,172
[1.4] [0.078]
Male 0.501 0.004 1,139
[0.029]
Mother’s highest grade completed 5.9 0.079 1,075
[2.7] [0.166]
Father’s highest grade completed 5.9 0.431 911
[2.9] [0.199]
Mother’s age 40.7 0.027 1,123
[7.3] [0.426]
Father’s age 44.4 0.567 940
[8.1] [0.533]
Father’s wage (>2 min wage) 0.100 0.005 861
[0.021]
Notes: The table reports voucher losers’ mean and difference for voucher winners. Stan-
dard deviations are in the first column for nonbinary variables. Standard errors are
included in the second column.
across winners and losers suggests that any bias resulting from non-
response is likely to be minimal (Angrist 1997). Because response prob-
abilities are uncorrelated with voucher win/loss status, there should
be little bias from our failure to interview all applicants.
Table 7.2 shows some basic student-level characteristics used in the
analysis. We only report descriptive characteristics in this table and re-
port student outcomes in other tables. As in table 7.1, the first column
shows the average characteristic of voucher lottery losers and the cor-
responding standard deviation. The second column of table 7.2 shows
the differences for voucher winners with the corresponding standard
error. The third column shows the sample size for the specific variable.
As before, we find few significant differences
The typical applicant was about 15 years old. About half of the
applicants were male. The average education of both the mothers and
fathers in the sample was slightly less than six years. We detected some
differences in the education levels of fathers in our data. We find that
fathers of voucher winners had about 0.4 years less of schooling com-
pleted, although we have a smaller sample size in these regressions.
150 Eric Bettinger
We also find that about 10% of the fathers in our data were earning
more than two minimum wages. This does not vary across voucher
status.
Our final source of data came from matching student applications
to the ICFES exam, the national college entrance exam. Ninety percent
of students graduating from Colombia’s secondary school system take
the ICFES exam. It is the most common exam used in college admis-
sions and 75% of test takers go on to college (World Bank 1993). Be-
cause of the high proportion of high school students who take the
exam, it is likely a better proxy for high school graduation than for col-
lege entrance.
The primary variables used in the matching were the student’s name
and identification number. If applicant lists had been updated so that
voucher winners had more correct names and ID numbers than
voucher losers, then we could detect spurious effects of the voucher
solely because winners would have more accurate information. Be-
cause our analysis found that voucher winners and losers in the Bogotá
1995 lottery had similar likelihood of having a valid national ID, we
focus our matching solely on them. We also matched ICFES records
for the 1992 cohort. Similar to the results I show below for the 1995
cohort, we found that voucher winners in the 1992 cohort were more
likely to take the college entrance than voucher losers. However,
because of the possibility that voucher winners’ records for the 1992
cohort had been updated, our finding could be spurious.
ICFES exams are offered twice a year, and for the 1995 cohort, we
searched for matches among all test-takers in 1999, 2000, and 2001.
Assuming that students had not repeated, they should have taken the
ICFES exam in 2000. The ICFES scores used here are from the rede-
signed scoring system introduced in March 2000. Our scores are for
the mathematics and language components of the Common Core of
Basic Competence (Nucleo Comun de Competencias Basicas), which in-
cludes modules in biology, chemistry, physics, mathematics, language,
history, geography, and a foreign language test chosen by the student.
The ICFES is given over a two-day period with two morning sessions
and an afternoon session on the first day. The mathematics and lan-
guage components of the Common Core each take one hour and have
35 questions. Test scores are reported on a scale of 0–100, with the
score distribution highly concentrated in the 30–70 range. The distribu-
tions of mathematics and language scores for all those tested in Bogotá
in March 2000 appear in figure 7.1 (for 6,868 examinees). We discuss
School Vouchers in Colombia 151
Figure 7.1
Distribution of Test Scores in Bogotá versus PACES Sample
(a) Language
(b) Math
152 Eric Bettinger
the specific variables from the ICFES and the matching strategy in sec-
tion 7.4 of this chapter.
yi ¼ Xi0 b 0 þ a0 Di þ ei ; ð7:1Þ
Table 7.3
Descriptive Statistics and Estimates of the Voucher Effect
Bogotá 1995
voucher lottery winners were about 5.5 percentage points less likely to
have repeated a grade.
This difference in repetitions is also manifested in looking at the like-
lihood of completion of the sixth, seventh, and eighth grades respec-
tively. About 94% of lottery losers had finished sixth grade but only
85% and 63% had finished seventh and eighth grades respectively. The
difference between voucher winners also increases over time so that by
eighth grade, voucher winners are about 10 percentage points more
likely to have finished the grade.
While grade repetition is often used a measure of the quality of edu-
cation in developing countries (e.g., Psacharopolous, Tan, and Jimenez
1986), grade repetition may not fully signal academic achievement in
the PACES setting. As part of the PACES program, students’ vouchers
were only renewed if students passed their grade. One explanation for
lower repetition rates is that schools may have had an incentive to pro-
mote voucher students in an effort to keep tuition monies flowing to
their schools.
To test whether the grade repetition result reflected higher academic
achievement, we administered a standardized exam to a sample of
ICFES applicants. On average, lottery losers scored about 0.2 standard
deviations above the population mean in both math and writing while
voucher winners scored about 0.2 standard deviations higher in writ-
ing. While voucher winners score higher in math and reading, the re-
sults are not statistically significant unless we combine the various test
scores. Although the sample we tested was fairly small, the fact that
voucher lottery winners scored higher than losers suggests that the
voucher had impacted student achievement within three years.
Finally, our results in table 7.3 show that voucher students were less
likely to be working at the time of survey. They were also less likely to
be married or cohabiting.
After three years, we found that students had more years of school
completed, less repetitions, and higher standardized exam scores, yet
it was unclear if these effects could turn into long-term effects. For
example, by the third year after the lottery, more than half of the stu-
dents were no longer using the voucher. Additionally, the group of
students who took the exam we administered was small and may not
have been fully representative of the population of lottery winners and
156 Eric Bettinger
Table 7.4
Voucher Status and the Probability of ICFES Match
Dependent Coefficient on voucher status
variable mean Basic controls
Matching strategy (1) (2)
Exact ID match .354 .059
[.015]
ID and city match .339 .056
[.014]
ID and seven-letter name match .331 .059
[.014]
ID, city, and seven-letter match .318 .056
[.014]
Notes: Robust standard errors are shown in brackets. The sample includes all applicants
to the Bogotá 95 voucher lottery with valid ID numbers and valid age data (i.e., ages 9 to
25 at application).
losers since only 60% of the students we invited to the exam actually
attended.
To test whether the voucher led to long-term educational differences
between voucher winners and losers, we gathered additional data on
PACES applicants’ ICFES exams. From the ICFES records, we know
whether a student took the ICFES exam and their test scores in math
and language if they did take the test.
Table 7.4 shows estimates of the effects of vouchers on the likeli-
hood that students take the ICFES exam. We report the coefficient on
voucher from equation 7.1 when we include covariates for gender and
age. We report estimates based on four different matching strategies. In
the first strategy, we matched students’ national identification num-
bers alone. On average we were able to match 35.4% of voucher appli-
cants to their college entrance exam. Voucher winners, however, were
5.9 percentage points more likely to be matched than voucher losers.
We also report estimates based on matching both the identification
number and the city of residence. Our match rate drops about 1.5 per-
centage points, but we still estimate a 5.6 percentage point effect of the
voucher. In relative terms, this is about a 20% effect of the voucher on
the likelihood of taking the college entrance exam. In the final row of
table 7.4, we report estimates based on the identification number, the
city of residence, and the first seven letters of a student’s last name.
Our match rate drops to 31.8% with the more stringent match criteria.
We still find a 5.6 percentage point difference between voucher win-
School Vouchers in Colombia 157
Table 7.5
OLS and Tobit Estimates of Voucher Effect on ICFES Exams
Dependent Coefficient on voucher status
variable mean Basic controls
Specification (1) (2)
Language scores
OLS with score > 0 47.4 .70
[5.6] [.33]
OLS censored at 1% 37.3 1.14
[8.0] [.24]
Tobit censored at 1% 37.3 3.29
[8.0] [.70]
Tobit censored at 10% 42.7 2.06
[4.7] [.46]
Math scores
OLS with score > 0 42.5 .40
[4.9] [.29]
OLS censored at 1% 35.7 .79
[5.8] [.18]
Tobit censored at 1% 35.7 2.29
[5.8] [.51]
Tobit censored at 10% 37.6 1.98
[4.6] [.45]
Notes: The table reports voucher losers’ means and the estimated effect of winning a
voucher. Numbers in brackets are standard deviations in the column of means and
standard errors in columns of estimated voucher effects. The regression estimates are
from models that include controls for age and gender. Censoring point is the indicated
percentile of the test score distribution, conditional on taking the exam.
The results thus far suggest that voucher winners had higher academic
achievement after three years and through the end of secondary
school. The result reflects the effect of winning the voucher and not the
effect of using a voucher. As already discussed, the voucher could have
improved student outcomes for a variety of reasons. It could have been
an income shock. The voucher could have strengthened the incentives
for students to work hard. The voucher could have also changed the
type of schools and peers that students had.
To shed light on some of the possible mechanisms, Bettinger,
Kremer, and Saavedra (2006) considered the effects of the voucher on
students who applied to vocational schools. As part of the PACES lot-
tery, students had to be accepted at a participating private school before
applying for the voucher. Many students applied to vocational schools.
These vocational schools were of inferior quality to the other private
schools. They had a smaller proportion of students taking the ICFES
exam and their students typically scored worse on the ICFES exam
than students in non-vocational schools.
160 Eric Bettinger
Figure 7.2
Tobit Coefficients by Censoring Percentile in Score Distribution. The figure plots Tobit
estimates of the effect of vouchers on test scores, using data censored at the point indi-
cated on the x-axis (i.e., values below the indicated percentile are assigned a value of
zero). For the purposes of this exercise, non-test-takers are also coded as having a score
of zero.
(a) Language
(b) Math
School Vouchers in Colombia 161
Table 7.6
OLS Estimates of Voucher Effect on ICFES Exams for Vocational Students
Coefficient on voucher status
Vocational Nonvocational
(1) (2) (3) (4)
Losers’ Basic Losers’ Basic
Dependent variable means controls means controls
A. Probability of taking ICFES
ID match .274 .056 .318 .057
[.030] [.466] [.017]
ID and city match .265 .052 .301 .061
[.030] [.459] [.017]
ID and name match .202 .048 .235 .033
[.028] [.424] [.016]
N 336 802 1077 2578
B. Performance outcomes on the ICFES
Math score conditional on taking 41.47 .844 42.37 .420
[4.811] [.621] [4.655] [.332]
Reading score conditional on taking 45.73 2.19 47.04 .487
[5.890] [.768] [5.373] [.373]
N 89 254 334 891
Notes: The table reports voucher losers’ means and the estimated effect of winning a
voucher. Numbers in brackets are standard deviations in the column of means and
standard errors in columns of estimated voucher effects. The regression estimates are
from models that include controls for phone access, age, type of survey and instrument,
strata of residence, and month of interview. Columns 1 and 2 report estimates for
students who had applied to and been accepted at a vocational school prior to the
voucher lottery.
likely a lower bound for the true effect on reading scores as discussed
in section 7.4).
The fact that voucher winners attended inferior schools and yet had
more positive outcomes suggests that the schools and peers may not
have been the operative channel by which the voucher affected student
outcomes. Bettinger, Kremer, and Saavedra (2006) show that peer ef-
fects alone cannot explain the voucher effects.
7.6 Conclusions
The Colombian voucher program was one of the largest voucher pro-
grams in the world, and the program seems to have had a positive ef-
fect on student outcomes after three years and through the end of
secondary school. After three years, students winning the voucher had
higher test scores, less grade repetition, and more years of schooling
completed than students who had lost the voucher lottery. Addition-
ally, voucher winners were more likely to attend private school, less
likely to be working, and less likely to be married or cohabiting. By
the end of high school, voucher winners were more likely than voucher
lottery losers to have taken the college entrance exam and had higher
college entrance exam scores.
The voucher program was a unique partnership between the public
and private sectors in Colombia. Thousands of students in Bogotá and
about 125,000 students nationwide took advantage of the program.
Angrist et al. (2002) shows that public expenditure increased only
slightly in funding the program, yet the benefits accrued to voucher
winners more than justified the costs.
One remaining puzzle in the Colombian voucher experience is how
the voucher program affected the students. If the Colombian program
affected students solely through private schools, then it may have dif-
ferent policy implications than a voucher program that affected stu-
dents by changing their incentives. The preliminary evidence, at least
for the subset of voucher winners who applied to vocational schools,
suggests that the academic quality of the schools may not have been
the mechanism by which the voucher affected students’ outcomes. The
voucher winners who had applied to vocational schools attended
schools with inferior peer quality yet had better academic outcomes
than voucher lottery losers. Future research hopefully will identify the
specific channel(s) by which vouchers affect students and hence pro-
vide a clearer picture of why the private-public partnership in the case
School Vouchers in Colombia 163
Notes
This paper is largely based on ‘‘Vouchers for Private Schooling in Colombia: Evidence
From a Randomized Natural Experiment’’ by Joshua D. Angrist, Eric Bettinger, Erik
Bloom, Elizabeth King, and Michael Kremer (American Economic Review, 2002) and
‘‘Long-Term Educational Consequences of Secondary School Vouchers: Evidence from
Administrative Records in Colombia’’ by Joshua D. Angrist, Eric Bettinger, and Michael
Kremer (American Economic Review, 2006). Figures 7.1 and 7.2 are reprinted with permis-
sion from the American Economic Review.
1. In Angrist et al. (2002), we also interviewed cohorts of students who applied for a
voucher in Bogotá in 1997 and in Jamundı́ in 1993. I only focus on the Bogotá 1995 cohort
in this paper.
References
Bettinger, Eric, Michael Kremer, and Juan Saavedra. 2006. Are educational vouchers
Redistributive? Evidence from Colombia. Mimeo, Case Western Reserve University,
Cleveland, Ohio.
Calderon, Alberto. 1996. Voucher programs for secondary schools: The Colombian expe-
rience. Human Capital Development and Operations Policy Working Paper. Washington,
D.C.: World Bank. Available at hhttp://www.worldbank.org/education/economicsed/
finance/demand/related/wp_00066.htmli.
King, Elizabeth, Peter Orazem, and Darin Wohlgemuth. 1998. Central mandates and
local incentives: The Colombia education voucher program. Working Paper No. 6, Series
on Impact Evaluation of Education Reforms, Development Economics Research Group,
the World Bank, February.
King, Elizabeth, Laura Rawlings, Marybell Gutierrez, Carlos Pardo, and Carlos Torres.
1997. Colombia’s targeted education voucher program: Features, coverage and participa-
tion. Working Paper No. 3, Series on Impact Evaluation of Education Reforms, Develop-
ment Economics Research Group, the World Bank, September.
164 Eric Bettinger
Mayer, Daniel, Paul Peterson, David Myers, Christina C. Tuttle, and William G. Howell.
2002. School choice in New York after three years: An evaluation of the School Choice
Scholarships Program. Program on Education Policy and Governance Occasional Paper
Series, Harvard University.
Morales-Cobo, Patricia. 1993. Demand subsidies: A case study of the PACES voucher
program. Working paper, Universidad de los Andes, Economics Department, Bogotá.
Psacharopolous, George, J. Tan, and E. Jimenez. 1986. Financing Education in Developing
Countries: An Exploration of Policy Options. Washington, D.C.: World Bank.
Rouse, Cecilia Elena. 1998. Private school vouchers and student achievement: An evalua-
tion of the Milwaukee Parental Choice Program. Quarterly Journal of Economics 13, no. 2:
553–602.
Sanchez, Fabio, and Jairo Mendez. 1995. Por que los niños pobres no van a la escuela?
(Determinantes de la asistencia escolar en Colombia). Mimeo, Departmento Nacional de
Planeacion Republica de Colombia.
World Bank. 1993. Staff appraisal report: Colombia, secondary education project. Latin
America and the Caribbean Region, Report 11834-CO.
8 The Public-Private School Controversy in Chile
Cristian Bellei
For more than two decades, Chilean education has operated under an
institutional design in which fundamental decisions do not rely on na-
tional authorities, but on the combination of family preferences (school
choice) and (public and private) school competition for attracting such
preferences.1 This system—which is an attempt to make education
a self-regulated market—was created during the 1980s as a part of a
large economic and institutional neoliberal reform.
The core of the reform was the inception of a common public fund-
ing system for all public and private subsidized schools: the educa-
tional voucher, which is a monthly payment to the schools, of a fixed
fee per each student who is enrolled in and regularly attends the
school. Additionally, the reform included several changes oriented to
promote competition among public and private schools. Families do
not have restrictions on choice of a school (whether public or private,
near to or distant from home), and schools must compete to attract
families’ preferences. The administration of public schools was decen-
tralized at the municipal level, and the management of schools (includ-
ing the curriculum and human and financial resources) was strongly
deregulated. Finally, reformers created a national evaluation system
of students’ learning (SIMCE, Spanish acronym for System of Mea-
surement of Educational Quality), aimed at informing families about
school quality.
Since 1990, the Chilean government has attempted to combine the
market institutions with stronger state regulations and interven-
tions. Thus, while some educational policies have been designed to
strengthen the market-oriented model (e.g., creation of a ‘‘price dis-
crimination’’ system among subsidized private schools, and publica-
tion of SIMCE results in the newspapers), others have tried to restrict
it, through the active promotion of social equity and educational qual-
ity (e.g., implementation of compensatory programs, creation of a
teacher labor statute, and the universal provision of computers, text-
books, and teacher training).
There are three kinds of schools in Chile: public schools, private
voucher schools, and private nonsubsidized schools. All primary and
most secondary public schools are free; about 90% of private voucher
schools are not free (they have a copay system), and private non-
subsidized schools are elite schools, totally paid for by families.2 This
The Public-Private School Controversy in Chile 167
There are two competing theories about systemic effects (i.e., the impact
of the voucher mechanism on the effectiveness of the educational sys-
tem as a whole) of the market mechanisms of Chilean education. One
states that subsidized private schools help to improve public schools
through a competition effect, predicting an overall improvement of
Chilean education. The other theory proposes that the potential pro-
ductivity effect may be canceled out by unexpected negative effects of
sorting on public schools (private schools ‘‘skim’’ the best public stu-
dents), with no systemic improvement. Unfortunately, there is very
little research on this issue.
Gauri (1998) studied the school choice process using a sample of
households from the Santiago metropolitan area. He found that higher
socioeconomic status was positively associated with the probability
of attending a school in the top third of the students’ achievement
distribution. Gauri also found that the probability of studying in a
high-performing school significantly increased when the student was
required to take a cognitive and/or academic test as an admission re-
quirement. Hseih and Urquiola (2003) attempted to evaluate whether
the introduction of school choice in Chile improved the productivity of
the school system at aggregated levels, and whether it increased the
educational and socioeconomic differences between private and public
schools. They analyzed fourth-grade mathematics and language test
168 Cristian Bellei
ordinary least squares estimates. These five studies constitute the sec-
ond phase of this kind of research.
Finally, McEwan (2001), Mizala and Romaguera (2003), Sapelli and
Vial (2002), Gallego (2002), and Mizala, Romaguera, and Ostoic (2004)
constitute a third, more sophisticated stage. These five studies ana-
lyzed student-level test scores as the outcome variable, and also in-
cluded student-level predictors. They used the nation-level database,
and included both primary and secondary education. They incorpo-
rated more sophisticated research methods, including hierarchical lin-
ear models, probabilistic models of choice, and instrumental variables.
Although some studies analyzed more than one year of students’
test scores, none of them is a longitudinal analysis but rather a series
of cross-sectional estimates. All studies have analyzed mathematics
and/or language test scores as the outcome variable. Most studies
compared public schools with two categories of private schools—
voucher and nonsubsidized schools—although some of them distin-
guished between Catholic and nonreligious voucher schools.
Surprisingly, there is a noticeable variation in the estimates of the
private voucher versus public schools test-score gap: while some
authors have found private voucher school advantage (0.05 S.D. to
0.27 S.D.), others have found public school advantage (0.06 S.D. to 0.26
S.D.), and some have found no statistically significant difference be-
tween them.4 An additional puzzle is that several studies differ in their
findings even when they analyze the same database. In order to under-
stand those discrepancies, the following sections deepen into method-
ological issues of the mentioned second- and third-phase studies.
Selection bias is the most serious limitation that affects the estimates of
the relative efficacy of private and public schools in Chile. As men-
tioned, the supply of private schools is neither randomly distributed
among geographical areas nor among social classes, and finding a
good instrument for the supply of private schools has proved to be ex-
tremely difficult. Additionally, the unregulated school choice and ad-
mission processes are highly complex and there is little information
about them.
Based on their preferences and their capacity to pay tuition, parents
can select any school. However, schools may also select their students.
The Public-Private School Controversy in Chile 171
8.5 Data
Table 8.1
Variable Definitions
Variable Definition
Student-level variables
Mathematics Standardized IRT test score
Language Standardized IRT test score
Mother’s education Years of education of the student’s mother
Father’s education Years of education of student’s father
Family income Natural LOG of student’s family income
Books Number of books at student’s home, scale ranging from 0
(0 books) to 5 (>200 books)
Gender Dummy variable for student’s gender (omitted category:
woman)
Repetition Dummy variable indicating whether the student has
repeated a grade
Selection Dummy variable indicating whether the student was
selected by the school through an admission process (e.g.
tests, grades requirements)
Parents’ expectation* Parents’ expectation about the future student’s educa-
tional attainment, scale ranging from 1 (4th grade) to 8
(graduate studies)
School-level variables
Type of school Dummy variables indicating whether the school is public
(omitted category), private voucher, or private non-
subsidized
Mean mothers’ education School average of years of education of students’ mothers
S.D. mothers’ education School standard deviation of years of education of
students’ mothers
Mean parents’ education School average of years of education of both students’
parents
Mean books at home School average of the individual variable ‘‘books at
home’’
Selected students Proportion of students who sere selected by the school
through an admission process
School SES level 5 dummy variables that classify schools in Low, Middle-
Low, Middle, Middle-High, High students’ socioeconomic
status (categories are based on parent’s education, family
income, and proportion of at-risk students in the school)
Quintile income Quintile classification of schools based on the school
average of family income
LOG school families’ Natural LOG of the school average of student’s family
income income
S.D. families’ income School standard deviation of the students’ family income
% repitent students in Percentage of students in the school who have repeated at
school* least a grade
174 Cristian Bellei
Table 8.1
(continued)
Variable Definition
School expels repitent School that (according to parents) expels students who
students* repeat a grade
Students always in this Proportion of students who have been in the same school
school* since 1st grade
School mean years in this School average of years that students have studied in this
school* school
Table 8.2
Comparing Public and Private Voucher School Students
Table 8.3
Predicting Private Voucher School Attendance: The Effect of Student Selection through
an Admission Process
Dependent variable: Private voucher school
attendance (vs. public school attendance)
Model 1 Model 2
Selected student 0.73*** 0.58***
(0.01) (0.01)
Mother’s education 0.04***
(0.00)
Father’s education 0.02***
(0.00)
Family income 0.04***
(0.01)
Log family income 0.25***
(0.03)
Books at home 0.11***
(0.01)
Constant 0.47*** 1.28***
(0.01) (0.02)
Max-Rescaled R 2 0.04 0.09
N (students) 237,492 237,492
Notes: Logistic regression models for the relationship between whether a student attends
a private voucher school (vs. public school) as a function of whether he was selected by
the school, and some family characteristics.
@
p < :10; *p < :05; **p < :01; ***p < :001
Source: Author elaboration.
Table 8.4
Identifying the Effect of Student Selection during the Schooling Process
Outcome variable: fourth-grade students’ mathematics test
scores, SIMCE-2002
Students who have Students who have
All students not changed schools changed schools
Model 1 Model 2 Model 3 Model 4 Model 5 Model 6
Private voucher 18.83*** 0.31 20.55*** 0.28 16.34*** 1.75***
(0.24) (0.27) (0.29) (0.33) (0.45) (0.49)
Private nonsubsidized 61.11*** 7.33*** 62.47*** 8.22*** 55.99*** 4.51***
(0.45) (0.59) (0.52) (0.72) (0.92) (1.08)
Student repeated at 21.66*** 23.77*** 19.30***
least a grade (0.38) (0.52) (0.63)
% repeating students 0.33*** 0.26*** 0.40***
in school (0.02) (0.02) (0.03)
School expels 10.54*** 7.82*** 14.74***
repeating students (0.72) (0.86) (1.40)
% students always in 15.99*** 32.11*** 0.06
this school (1.40) (1.93) (2.43)
School mean years in 1.30*** 0.05 2.90***
this school (0.39) (0.48) (0.71)
Constant 238.2*** 188.2*** 239.9*** 180.7*** 234.8*** 192.6***
(0.16) (1.02) (0.19) (1.37) (0.32) (1.82)
Additional control no yes no yes no yes
variables
R2 0.10 0.25 0.11 0.26 0.07 0.25
N (students) 199,112 199,112 137,181 137,181 54,895 54,895
Notes: Relationship between school type and mathematics achievement. Additional con-
trol variables include gender, father’s and mother’s education, LOG family income,
books at home, parent’s expectation, and school SES level. Omitted category: public
schools.
@
p < :10; *p < :05; **p < :01; ***p < :001
Source: Author elaboration.
centage of retained students in the school and test scores is stronger for
students who have moved to a different school than for students who
have remained in the same school. Both results point in the same direc-
tion: students who change school seem to be more sensitive to the
selective nature of their new school. Note that this can be the result of
schools selecting the best students and families choosing more selective
schools.
As shown in table 8.4, while there is not a statistically significant
difference between public and private school students within the
178 Cristian Bellei
population who have not changed school, among students who have
changed school, students in public schools score slightly higher than
their peers in voucher schools (0.03 S.D.). Consequently, part of the pri-
vate schools’ advantage can be based on their capacity to select and
attract more skilled students. Finally, although the gap between private-
nonsubsidized and public schools is reduced for both groups of stu-
dents, it remains statistically significant, suggesting that there is little
transfer of students between public and private nonsubsidized schools.
Table 8.5
Regression Models that Relate School Type and Students’ Mathematics Achievement,
Controlling for Parents’ Education Variables
Dependent variable: 10 th -grade students’ mathematics test
scores, SIMCE-2003
Model 1 Model 2 Model 3 Model 4 Model 5 Model 6
Private voucher 20.35*** 14.82*** 13.66*** 1.21*** 20.41*** 1.69***
(0.25) (0.24) (0.24) (0.24) (0.25) (0.24)
Private nonsubsidized 86.77*** 64.99*** 59.11*** 0.30 87.01*** 2.27***
(0.45) (0.47) (0.47) (0.55) (0.46) (0.57)
Mother’s education 3.82*** 2.58***
(0.03) (0.04)
Father’s education 2.05***
(0.04)
School mean mother’s 13.49*** 13.55***
education (0.06) (0.06)
School S.D. mother’s 0.67* 4.32***
education (0.33) (0.30)
Constant 230.07*** 194.56*** 186.32*** 107.25*** 227.92*** 120.50***
(0.17) (0.33) (0.36) (0.55) (1.06) (1.06)
R2 0.14 0.20 0.21 0.30 0.14 0.30
N (students) 237,492 237,492 237,492 237,492 237,492 237,492
mother’s education changes its sign and increases its effect (i.e., at sim-
ilar levels of mother’s education, more homogeneous schools tend to
score higher than more heterogeneous schools). According to model 6,
public schools score significantly higher than private voucher schools
(0.03 S.D.) when both school-level variables are simultaneously in-
cluded, and this difference is larger than that estimated in model 4,
which only controls for the level, not the variation in mother’s educa-
tion (observe that a similar pattern is identified when comparing pub-
lic and nonsubsidized private schools).
Regression Models that Relate School Type and Students’ Mathematics Achievement
Controlling for School SES Variables
Dependent variable: 10 th -grade students’ mathematics test scores, SIMCE-2003
Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7 Model 8 Model 9 Model 10 Model 11
Private voucher 20.42*** 2.30*** 0.53* 1.34*** 6.79*** 0.52* 1.59*** 1.54*** 2.09*** 2.58*** 1.93***
(0.25) (0.24) (0.25) (0.25) (0.24) (0.24) (0.25) (0.25) (0.24) (0.24) (0.24)
Private nonsubsidized 86.75*** 3.95*** 41.44*** 8.56*** 10.70*** 1.95*** 3.54*** 4.04*** 4.05*** 11.16*** 7.03***
(0.45) (0.79) (0.47) (0.56) (0.59) (0.56) (0.55) (0.58) (0.56) (0.79) (0.58)
Middle-low SES 10.46*** 14.61***
(0.30) (0.38)
Middle SES 49.95*** 9.29***
(0.34) (0.67)
Middle-high SES 82.04*** 4.79***
(0.53) (1.02)
High SES 105.91*** 6.33***
(0.92) (1.43)
Quintile school 22.33***
income (0.11)
Log school family 37.57*** 30.13*** 8.01***
Incom. (0.18) (0.33) (0.52)
S.D. school family 35.24*** 9.27*** 7.13***
Income (0.19) (0.34) (0.34)
Mean school parents’ 12.99*** 7.80*** 7.65*** 7.68***
education (0.06) (0.13) (0.17) (0.16)
Mean books at home 49.12*** 22.15*** 24.90*** 25.18***
(0.22) (0.51) (0.51) (0.55)
Cristian Bellei
Constant 230.1*** 215.1*** 186.1*** 227.9*** 184.1*** 109.8*** 148.5*** 216.2*** 121.0*** 127.1*** 108.3***
(0.17) (0.25) (0.16) (0.30) (0.56) (0.40) (0.46) (0.61) (1.07) (1.30)
R2 0.14 0.27 0.27 0.27 0.25 0.29 0.29 0.27 0.30 0.31 0.30
N (students) 237,427 237,427 237,427 237,427 237,427 237,427 237,427 237,427 237,427 237,427 237,427
Table 8.7
Regression Models that Relate School Type and Students’ Mathematics Achievement,
Controlling for Students’ and School Variables
Dependent variable: 10 th -grade students’ mathematics test
scores, SIMCE-2003
Model 1 Model 2 Model 3 Model 4 Model 5 Model 6
Private voucher 20.35*** 11.89*** 10.06*** 2.40*** 3.15*** 3.51***
(0.25) (0.24) (0.24) (0.25) (0.24) (0.24)
Private nonsubsidized 86.77*** 49.85*** 47.64*** 5.45*** 1.29* 0.52
(0.45) (0.51) (0.50) (0.58) (0.58) (0.59)
Mother’s education 1.90*** 1.71*** 0.74***
(0.04) (0.04) (0.04)
Father’s education 1.34*** 1.24*** 0.35***
(0.04) (0.04) (0.04)
Log family income 4.81*** 4.86*** 1.20***
(0.20) (0.20) (0.19)
Books at home 6.71*** 6.29*** 3.65***
(0.10) (0.10) (0.10)
Gender (male) 7.66*** 7.77*** 9.11***
(0.22) (0.22) (0.20)
Selected student 18.84*** 3.96***
(0.24) (0.27)
School mean parents’ 7.91*** 7.17*** 5.97***
education (0.13) (0.13) (0.13)
School S.D. mother’s 3.47*** 0.88** 0.48
education (0.30) (0.30) (0.29)
School mean books at 21.79*** 16.17*** 13.93***
home (0.51) (0.51) (0.51)
% selected students in 33.44*** 29.52***
school (0.46) (0.51)
Constant 230.1*** 181.8*** 174.0*** 131.7*** 119.99 112.0***
(0.17) (0.37) (0.38) (1.08) (1.08) (1.08)
R2 0.14 0.23 0.25 0.30 0.32 0.33
N (students) 237,492 237,492 237,492 237,492 237,492 237,492
Notes: Omitted category: public schools.
@
p < :10; *p < :05; **p < :01; ***p < :001
Source: Author elaboration.
The Public-Private School Controversy in Chile 185
Table 8.8
Multilevel Regression Models. Relationship between School Type and Students’ Mathe-
matics and Language Achievement, Controlling for Student and School Variables
Dependent variable: 10 th -grade students’ test scores,
SIMCE-2003:
Mathematics Language
Initial between- 49% 37%
schools variation
Initial within- 51% 63%
schools variation
Model 1 Model 2 Model 3 Model 4 Model 5 Model 6
Private voucher 2.89* 24.26*** 3.30* 1.78* 18.56*** 1.87*
(1.42) (1.65) (1.43) (0.89) (1.12) (0.88)
Private nonsubsidized 4.32@ 70.25*** 3.56 4.35** 47.69*** 3.42*
(2.49) (2.09) (2.49) (1.58) (1.44) (1.56)
School mean parents’ 4.97*** 4.39*** 4.23*** 3.63***
education (0.56) (0.56) (0.36) (0.35)
School mean books at 17.35*** 14.23*** 15.00*** 10.89***
home (2.13) (2.14) (1.37) (1.36)
% selected students in 39.00*** 35.79*** 25.25*** 22.79***
school (2.31) (2.32) (1.46) (1.45)
Mother’s education 0.87*** 0.84*** 1.04*** 1.00***
(0.03) (0.03) (0.03) (0.03)
Log family income 0.69*** 0.78*** 1.06*** 1.20***
(0.17) (0.17) (0.16) (0.16)
Books at home 4.09*** 4.02*** 4.10*** 4.00***
(0.09) (0.09) (0.08) (0.08)
Gender (male) 10.36*** 10.39*** 4.29*** 4.28***
(0.21) (0.21) (0.19) (0.19)
Selected student 4.01*** 3.63*** 2.99*** 2.49***
(0.24) (0.24) (0.22) (0.22)
Percentage of
explained variation:
Between schools 71.6% 48.1% 71.6% 79.7% 55.0% 80.2%
Within schools 0% 2.8% 2.8% 0% 2.4% 2.4%
Number of students 237,629 237,629 237,629 237,629 237,629 237,629
(schools) (2,105) (2,105) (2,105) (2,105) (2,105) (2,105)
Notes: Omitted category: public schools.
@
p < :10; *p < :05; **p < :01; ***p < :001
Source: Author elaboration.
188 Cristian Bellei
The reasons why private schools are not more effective than public
schools in Chile are beyond the scope of this study. One hypothesis is
that although in the past voucher schools were more effective, public
schools have reacted to the competition by improving their quality,
and consequently have closed the previous gap. As explained, there is
little—if any—evidence to support this hypothesis. An alternative
hypothesis is that the institutional design of the Chilean educational
system has structural deficiencies, because schools can improve their
market position without improving the quality of their educational
service.
The theory underlying this last hypothesis is as follows: competition
among schools has not improved educational quality, because schools
(mainly the private ones) have competed to attract the best students
rather than to improve their educational service, creating a ‘‘zero-sum
game’’: improvements of some schools are annulled by deterioration
of others. Additionally, because parents’ choices have not necessarily
been oriented to educational quality (owing to information deficiencies
and parents’ use of nonacademic criteria), schools have not received
from their customers signals guiding them toward educational im-
provement, but rather toward the use of status symbols and social seg-
regation. Finally, deregulation and free competition have tended to
increase school segregation through a process of mutual reinforcement
between schools and families. From the supply side, schools have
responded to the incentives of competence, by distorting the indicators
of quality through the rejection of students who are less likely to suc-
ceed in school (applying admissions tests), and those who have dem-
onstrated low capacities (expelling them). These sorting and re-sorting
mechanisms, massively applied for two decades, have shaped the Chil-
ean school system in its current segregated features. From the demand
point of view, middle and high social-class families have found that
schools’ social and academic selectivity provide them a large profit of
peer effects within schools: given the high correlation between learning
outcomes and students’ social background, when Chilean families aim
at social selectivity, they obtain academic selectivity by extension.
The current evidence and the main findings of this chapter provide
partial support to this theory. Nevertheless, this study also has some
limitations. First, although it exploited new data on the student selec-
tion processes to eliminate the selection bias, we cannot be completely
confident that the regression models overcame this threat to validity.
Second, because SIMCE does not evaluate the same students over
time, it was not possible to develop longitudinal analyses or create
190 Cristian Bellei
Notes
I would like to thank Paul Peterson, Rajashri Chakrabarti, Marcela Pardo, Brian Jacob,
Roland Fryer, and Richard Murnane for their valuable commentaries and suggestions.
3. Vegas (2002) is an exception: she analyzed 1999 data, and used a unique database on
teachers’ characteristics.
4. Catholic schools have been estimated to be—on average—more effective than public
schools. Unfortunately, in my analysis I cannot distinguish between Catholic and non-
Catholic private schools.
5. Note that this repetition rate is at the middle of fourth grade. According to the Chilean
rules, students should not repeat first grade; thus at that point, students could have re-
peated only second and third grades.
6. I will report the test-score gap in S.D. units. I divided the regression coefficients by the
population S.D. (mathematics S.D. ¼ 56; language S.D. ¼ 48).
7. I did not include the most used school SES index, which is the percentage of students
‘‘at risk.’’ This index is an administrative tool used by the Ministry of Education to dis-
tribute free lunches among schools. The index is based mainly on physical health indica-
tors; it uses only information from the first-grade students, and is self-reported by the
schools. All private nonsubsidized and many private voucher schools have no informa-
tion on this index (researchers assign 0% to these schools). Thus, I do not consider this
index a good measure for research purposes.
8. As a point of reference, consider that the PISA (OECD/UNESCO 2003)—an inter-
national survey of students’ performance in language, mathematics, and science—found
a negative relationship between the level of student achievement and the level of be-
tween-schools variation. For example, the three countries with the highest student
performance—Finland, Canada, and New Zealand—had between-schools variations of
12%, 18%, and 16% respectively; the United States had 30% between-schools variation,
and Chile had one of the highest levels of between-schools variation: 57%.
9. It is important to note that the proportion of explained variation is relative to the re-
spective proportion of explainable between- and within-schools variations.
References
Bellei, Cristian, and Isidora Mena. 2000. The new challenge: Quality and equity in educa-
tion. In Chile in the nineties, ed. Cristian Toloza and Eugenio Lahera, 349–391. Palo Alto,
CA: Stanford University Libraries.
Bravo, David, Dante Contreras, and Claudia Sanhueza. 1999. Rendimiento educacional,
desigualdad, y brecha de desempeño privado público: Chile 1982–1997. Working paper,
Department of Economics, University of Chile.
Carnoy, Martin, and Patrick McEwan. 2000. The effectiveness and efficiency of private
schools in Chile’s voucher system. Educational Evaluation and Policy Analysis 22, no. 3:
213–239.
192 Cristian Bellei
Mizala, Alejandra, and Pilar Romaguera. 2003. Equity and educational performance.
Center for Applied Economics, Department of Industrial Engineering, University of
Chile.
Mizala, Alejandra, Pilar Romaguera, and Carolina Ostoic. 2004. A hierarchical model for
studying equity and achievement in the Chilean school choice system. Center for Applied
Economics, Department of Industrial Engeneering, University of Chile.
Rodriguez, Jorge. 1988. School achievement and decentralization policy: The Chilean
case. Revista de Analises Económico 3, no. 1: 1.
Sapelli, Claudio. 2003. The Chilean voucher system: Some new results and research chal-
lenges. Cuadernos de Economı́a 40, no. 121: 530–538.
Sapelli, Claudio, and Bernardita Vial. 2002. The performance of private and public
schools in the Chilean voucher system. Cuadernos de Economı́a 39, no. 118: 423–454.
Vegas, Emiliana. 2002. School choice, student performance, and teacher and school char-
acteristics: The Chilean case. World Bank Policy Research Working Paper 2833, April.
9 The Concession Schools of Bogotá, Colombia
Felipe Barrera-Osorio
lower than the average scores for regular public schools. However, as
will be discussed, though the test scores for concession schools were
lower according to a general comparison of means, in fact once con-
founding variables are controlled for, it appears that the concession
schools do have a positive impact.
The qualitative evidence compiled during the visits to the concession
schools and the public debate in the council induced three main
hypotheses that are the subject of this chapter:
Included among the variables of school inputs, Zj; t , are the student-
teacher ratio, the educational attainment of the teachers, school infra-
structure, and school size. The characteristics of the individuals, Xi; t ,
control for household income, the educational level of the parents, the
number of siblings, and so on. In equation (9.1), ei; t captures the un-
observable characteristics of the individual, such as ability, skills, and
motivation that may influence test scores but cannot be measured. The
dependent variables, Yi; j; t , are the standardized test scores and the
dropout rate.
Equation (9.1) depends on several premises:
n
The quantity and quality of the school inputs are fundamental in the
production of better education, be they measured by higher standard-
ized test scores or lower dropout rates.
n
The characteristics of the individuals are also critical elements in the
production of better education. Individuals with better skills and better
nutrition and with an adequate home environment should also per-
form better in school.
n
These two groups of characteristics (school and individual/family)
interact to yield the third fundamental component in the education
production function.
In a meta-analysis of equation (9.1) Hanushek (1996) reaches several
conclusions. First, there is no clear relationship between several of the
school inputs and the quality of education. The pupil-teacher ratio, for
example, may have a concave relationship with the outcome measures.
A small number of pupils in the classroom may inhibit participation
and it is possible that the positive externalities of participation do not
occur. A large class size may also inhibit participation and may pro-
The Concession Schools of Bogotá 197
of the control group since there are no treatment observations with the
characteristics of these individuals. The third potential difference be-
tween the groups arises from potential differences in the unobservable
characteristics. According to the estimates of Heckman and others
(1998), once the observable characteristics are similar between groups,
and the observations fall within the same support, the bias due to
unobservable characteristics is relatively small.
The evaluation of the concessions program in Bogota may suffer
from self-selection into the program from two sources. First, the loca-
tions of the schools were not randomly chosen. Authorities built the
concessions in areas where there was a high concentration of low-
income individuals and a scarce supply of public education. Second,
an unknown proportion of the students are not randomly assigned to
the schools. Individuals, when applying to public education, can state
their preferred school in their neighborhood. As previously discussed,
this chapter copes with the problem of endogeneity by using propen-
sity scores and matching estimators. In this way, I ‘‘minimize’’ the
endogeneity problem and can obtain estimates that approximate the
impact of the program. In any case, the predicted bias of the estimation
is downward since the pool of individuals that attend concessions
comes from extremely poor areas.
The chapter presents direct and indirect impacts of the concession
schools. In order to estimates these impacts, I separate the public
schools into three categories: (1) concession schools; (2) regular pub-
lic schools close to concession schools (that is, within the influence of
a concession school); and (3) public schools outside of the influence
of concession schools. The difference between students in concession
schools and the matched students who go to public schools outside
the influence of concession schools is the measure of direct impact.
In contrast, the indirect impact of concession schools is measured as
the difference between the students in public schools in the vicinity of
concession schools and the students in similar schools outside the con-
cessions’ area of influence. The area of influence is defined as being
within one kilometer of a concession school. Given that some conces-
sions are going to have more than one regular public school within
this definition of proximity, we also rank the proximity among the
nearby schools.5
The indirect impact is governed conceptually by the idea that nearby
schools may be forced to raise the quality of education to compete with
concession schools, as well as to respond to community pressure. This
202 Felipe Barrera-Osorio
idea is similar to the argument that vouchers will increase the quality
of education due to market and choice forces, as outlined by Friedman
(1955). Recent literature finds evidence in favor of this type of mecha-
nism. For instance, Hoxby (2002) shows that competition and choice
(in the form of vouchers and charter schools) increase productivity of
public schools significantly. In the case of Bogotá, not only do the con-
cession schools impact the nearby public schools through community
outreach but they also encourage better performance by regular pubic
schools due to the competition for resources. Since 2002, the central
government has transferred educational resources to the localities
based on the number of students enrolled in school. Presumably, con-
cessions attract students away from the regular public school system,
and the greater the difference in quality between regular and con-
cession schools, the greater the effect. In order to guarantee greater re-
sources, the nearby public schools need to match the performance of
the concession schools.
To estimate the indirect impact of the program, I use a two-step pro-
cess. I first identify the baseline. Given the identification of nearby
schools as discussed, I match them based on their common characteris-
tics with similar schools outside the influence area as of 1999. As stated
before, concession schools that started in 1999 were fully operational
by 2000. These control schools are determined using propensity scores.
Second, employing data for 2003, I estimate the indirect impact using
those students who attended schools close to a concession school as
treated individuals, and those students who attended the matched
schools found in the previous step as the control group. For the indi-
rect impact I only investigate effects on dropout rates under the as-
sumption that changes in standardized testing, via competition effects,
will tend to be observable only in the long term.
The baseline data can be used to control for differences in initial
characteristics. However, another problem that may persist is the dif-
ference in preexisting trends between the treated schools and the
matched schools. Unfortunately, data prior to 1999 does not exist to
test for this possibility. However, a priori, there is no theoretical
ground to believe that there exist systematic differences in trends be-
tween schools under the influence of concessions and schools outside
this area of influence.
In short, the estimation that I will present is based on matching esti-
mators using propensity scores to determine the treatment and control
groups. The estimation will present evidence of ‘‘direct impact’’ (drop-
The Concession Schools of Bogotá 203
out rates and test scores for concession versus matched non-concession
public schools outside the area of influence) and ‘‘indirect impact’’
(dropout rates for schools near the concession against matched schools
outside the area of influence of concessions).
Table 9.1
Basic Statistics: Public Schools
Non-concession Concession
Table 9.1
(continued)
Non-concession Concession
B. Outcomes
Dropout rates
Grade 1 0.040 0.05 0.020 0.02
Grade 2 0.031 0.04 0.023 0.02
Grade 3 0.026 0.04 0.019 0.02
Grade 4 0.026 0.03 0.015 0.02
Grade 5 0.020 0.33 0.018 0.02
Grade 6 0.071 0.09 0.021 0.02
Grade 7 0.040 0.04 0.025 0.02
Grade 8 0.038 0.04 0.032 0.03
Grade 9 0.039 0.05 0.036 0.03
Grade 10 0.033 0.04 0.038 0.04
Grade 11 0.012 0.02 0.021 0.05
Test scores
Mathematics 42.08 5.13 41.68 4.77
Reading 50.99 7.13 51.04 6.79
Number of observations
Students
Max. 36244 1056
Min. 34218 1013
Schools 2790 17
Figure 9.1 shows the dropout rate per grade. The dropout rates
in concession schools are lower and exhibit smooth behavior across
grades. In contrast, public schools mimic the behavior of the dropout
rates found in other datasets using national statistics (for example, Bar-
rera and Dominguez 2005).
Interestingly, dropout rates for concession schools increase signifi-
cantly in grade eight. This may indicate a change in the composition
of students in secondary education in the concession schools. Since
attending a concession school reduces the dropout rates for grade six,
more students, including those who would have dropped out in the
regular public system, are reaching higher grades. The population of
students in secondary education in the concession schools includes
those in the lower part of the income distribution, who have a higher
probability of dropping out of school.
208 Felipe Barrera-Osorio
Figure 9.1
Dropout Rates, Concessions versus Non-concessions
Figure 9.2 presents mean standardized test scores for regular public
and concession schools. It shows that there small differences between
regular public schools and concessions. On average, public schools
show slightly higher scores in mathematics and physics, and almost
identical results in reading.
Table 9.2 presents basic statistics for the public schools located with-
in a kilometer of a concession school, as well as public schools outside
the influence of concessions.
In 1999, regular public schools near concession schools had, on aver-
age, fewer resources than other public schools. For instance, the num-
ber of computers in schools near concession schools was only 17,
whereas it was 25 in schools in other parts of the city. Also, the ab-
solute numbers of teachers, administrative personnel, physicians, and
psychologists were lower in regular public schools near concession
schools. The educational attainment of teachers in 1999, measured as
the proportion of teachers with secondary studies to those with college
or graduate studies, was very similar across the two school types. Fi-
nally, regular public schools near concession schools had, on average,
24 students per teacher, compared to 26 students per teacher in the
rest of the public system. In sum, there is evidence that regular public
schools near concession schools were smaller and poorer than the rest
of the public system, although the quality of the teachers was similar.
The Concession Schools of Bogotá 209
Figure 9.2
Mean Test Scores
9.3.3 Results
Estimates of equation (9.2), the average treatment impact on the
treated, are presented as follows. There are several different estimators,
210 Felipe Barrera-Osorio
Table 9.2
Basic Statistics: Schools near Concession versus Public Schools
A. Characteristics of schools
Table 9.2
(continued)
Schools near a Schools far away
concession from a concession
Shift
Complete 0.04 0.20 0.03 0.18
Morning 0.28 0.45 0.40 0.49
Afternoon 0.07 0.25 0.14 0.35
Evening 0.61 0.49 0.43 0.49
Number of students
Total school 2544.18 786.25 2954.60 1376.76
Taking exam 136.97 69.02 122.15 79.16
Old for grade 35.52 35.30 47.28 45.15
Repeating grade 114.93 88.69 103.30 73.72
Ratio teacher-stud. 31.42 2.56 28.44 6.20
Years of teacher education 16.49 0.73 16.07 2.28
Dropout rates
Grade 1 0.035 0.04 0.040 0.05
Grade 2 0.030 0.03 0.031 0.04
Grade 3 0.030 0.03 0.026 0.04
Grade 4 0.018 0.02 0.026 0.03
Grade 5 0.021 0.02 0.020 0.33
Grade 6 0.054 0.06 0.071 0.09
Grade 7 0.029 0.03 0.040 0.04
Grade 8 0.051 0.04 0.038 0.04
Grade 9 0.046 0.03 0.039 0.05
Grade 10 0.040 0.03 0.033 0.04
Grade 11 0.012 0.02 0.012 0.02
Number of schools 23 416
Table 9.3
Direct and Indirect Impact of Concessions: Effects over Dropout Rates
Direct impact over Indirect impact over
dropout rate dropout rate
Concession Schools near concession
Probit estimates Standard Standard
Depended variable Coefficient error Coefficient error
Total number of students 0.008 0.001 0.015 0.003
Dispersion in the test 0.366 0.080 0.708 0.178
Localization 4 13.472 8.162
Localization 5 0.024 0.168 9.129 8.556
Localization 7 0.212 0.138 13.929 8.089
Localization 8 0.052 0.163 12.411 8.234
Localization 9 0.048 0.155 12.455 8.311
Evening shift 0.243 0.173 1.966 0.430
Ratio teacher-stud. 0.284 0.046 0.514 0.094
Average no. of years of teacher 0.035 0.025 0.080 0.079
education
% of students repeating 1.723 0.351 1.407 0.502
% of students old for grade 3.327 0.719 5.040 1.709
Number of computers, 1999 0.027 0.020
Number of classrooms, 1999 0.053 0.038
Number of restrooms, 1999 4.686 0.719
Number of sport facilities, 1999 1.723 0.260
Number of teachers, 1999 0.476 0.278
Number of administrative 0.202 0.050
personnel 1999
Number of psychologist, 1999 0.069 0.187
Ratio teacher-stud., 1999 0.059 0.038
% teachers with second, 1999 35.714 10.066
% teachers with college, 1999 33.968 9.841
% teachers with graduate 25.912 8.898
studies, 1999
Log likelihood 529 231
Pseudo R 2 0.1391 0.5714
Number of observations 2334 1217
The Concession Schools of Bogotá 213
Table 9.3
(continued)
Direct impact over Indirect impact over
dropout rate dropout rate
Impact variable: Impact variable:
Matching dropout rate dropout rate
Variable: dropout rate
Difference treatment-control
Unmatched 0.0130 0.0069
ATT 0.0173 0.0082
Bootstrap statistics
Repetitions 1000 1000
Standard error 0.0039 0.0096317
Bias-corrected confidence 0.0244 0.0112 0.0341 0.0004
interval
The results for the direct and indirect effects on dropout rates are pre-
sented in Table 9.3. The unit of observation is the dropout rate by grade
by school. The first two columns present the results from the estimation
of equation (9.3) for concession schools, whereas columns three and
four present the results for the indirect impact on nearby regular public
schools. The estimation uses data at the school and grade level.
In general, the coefficients of the probit estimation to determine the
propensity scores are the move in the expected direction for both types
of impacts. I tested for the balance of characteristics across treated and
control schools. The groups are balanced in all variables except two
(number of students and proportion of students in grades lower than
their age). In order to improve the balance in the two samples, I omit-
ted observations with the extreme propensity scores from the analysis.
In any case, one variable remained unbalanced.
The lower part of table 9.3 presents the impact of the program on
dropout rates. The results show that concession schools (17 in the sam-
ple) have lower dropout rates (with a difference of 1.7 points) than sim-
ilar public schools (2,790 public schools). Given the range of dropout
rates (between 1.2% and 7.1%), this is an important and large effect. In
order to find the standard error for the estimator, a bootstrap proce-
dure was performed with 1,000 repetitions. The effect is statistically
different from zero at the 90% level of significance.
Columns three and four present evidence of the indirect impact.
That is, the probit is run with a dependent variable that equals one for
214 Felipe Barrera-Osorio
regular public schools near concession schools and zero for public
schools outside the influence of concessions. Again, in general, the pro-
bit estimates move in the expected direction and several of them are
statistically significant. The estimated indirect impact of concession
schools on nearby public school dropout rates is a reduction of 0.008
points. However, the standard error for the estimator (using a boot-
strap procedure with 1,000 repetitions) indicates that the 90% confi-
dence interval is between 0.03 and 0.0004. Thus, I cannot rule out
that there was no impact.
Table 9.4 presents estimations of the direct impact of concession
schools on the standardized test scores in mathematics and reading.
The data are at the individual level. As in the previous regressions, the
majority of the coefficients of the independent variables in the probit
estimation move in the expected direction, and several of them are
statistically significant, with one caveat: in contrast to the previous esti-
mation, there are several variables that are not balanced in the treat-
ment and control individuals (results are not shown). To address this,
I reduced the range of propensity scores in which the matching is per-
formed, with some improvements on the balance of the samples. The
implication is, again, that the treatment impact is for those individuals
within this range of propensity scores and not for the whole popula-
tion. The results hold for both estimations (math and reading).
The calculated impact is positive and statistically significant for both
reading and mathematics test scores. Mathematics scores for conces-
sion schools are almost one point higher than similar regular public
schools and the effect is significantly different from zero. The impact
on reading scores for concession schools is higher, with an estimated
impact of almost 2 points. Given that the average scores are 42.08 and
50.99, the results imply improvements of 2.4% and 4%, respectively.
It is important to note that a simple comparison between conces-
sion schools and other public schools shows that concession schools
have, on average, lower math tests. Indeed, the unmatched impact is
0.2099. However, once the estimation controls for the observable
characteristics, the impact of concessions on the score is positive and
significant.
9.4 Conclusions
Table 9.4
Direct Impact of Concessions: Effects on Test Scores (Mathematics and Reading)
Math tests Reading tests
Concession Concession
Probit estimates Standard Standard
Depended variable Coefficient error Coefficient error
Notes
6. The data identifies nine main geographical areas (subdivisions of location of the
school in the north, south, west, and east parts of the city).
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Maryland, College Park.
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bia and Mexico Country Management Unit, Education Unit, Human Development De-
partment, Latin America and the Caribbean Region. Washington, DC: World Bank.
10 Public and Private Schooling Initiatives in
England
education. There are several reasons why this has become a popular
venture. First, the development of a quasi-market in education has po-
litical currency.1 Its link to incentives and to the perceptions of better
performance in the private sector lends itself naturally to the education
market. Second, in the last couple of decades there has been an up-
surge of public-private ventures in a range of industries in the United
Kingdom. Third, teacher unions have weakened, and traditionally they
would have opposed private finance initiatives and public-private
partnerships.
The chapter has two main parts. Section 10.1 discusses private edu-
cation in England. Section 10.2 looks at a particularly high-profile pri-
vate finance initiative that has been introduced to the English state
school sector recently, the city academies program. Section 10.3 offers
some conclusions.
Table 10.1
State and Private Schools in England, 2006
All1 Private Private Share
Figure 10.1
Share of Private Schools in Total Schools, 1963 to 2006
Source: Calculated from various issues of Statistics of Education—Schools in England.
Figure 10.2
Share of Private School Pupils in Total School Pupils, 1963 to 2006
Source: Calculated from various issues of Statistics of Education—Schools in England.
Public and Private Schooling Initiatives in England 223
Table 10.2
Regional Variations, 2006
Pupil-
Number Number teacher
Number of of pupils ratio in
of private Private Number in private Private private
schools schools share of pupils schools share schools
Table 10.3
Comparison of Teacher Characteristics in the Private Relative to the State Sector
Teacher characteristic Private against state Evidence
are longer, showing that teachers probably like the better work condi-
tions and holiday arrangements in private schools.
Table 10.4
Academic and Labor Market Outcomes for Private School Pupils Relative to State School
Pupils
Private
Outcome against state Evidence
GCSEs (exams taken Higher DCSF, Naylor, Smith, and McKnight
at age 15/16) (2002)
A Levels (exams taken
at age 17/18)
University attendance Higher In 2003, 13.2 percent of new first-year
students from independent schools
(Teaching Quality Information
National Student Survey)
Labor market earnings Higher Naylor, Smith, and McKnight (2002),
(among graduates) Green, Machin, Murphy, and Zhu
(2007)
Table 10.5
Delivery and Financing by Public and Private Actors in Education
Financing of initiative
Minority private/
Public majority public Private (capital)
Delivery of service
Public Management of Specialist schools1
(maintained) state
schools
Private Contracting-out Academies; Some Private finance
services LEA services initiatives
Public and private Supply teachers Education Action Contracting-out
(when needed) Zones2 services
Notes:
1. Specialist schools are maintained secondary schools that follow the National Curricu-
lum and specialize in a designated subject area. A small amount of financing must be
raised through private sector sponsors, while the majority of funding comes in the form
of additional government grants in excess of that received by nonspecialist state schools.
2. Education Action Zones involve a cluster of around 15 to 25 schools that adopt inno-
vative practices to raising education standards in disadvantaged areas. For this they re-
ceive around £1 million in additional funds (approx 75% of which comes from central
government and 25% is raised through private sector sponsors).
Source: Adapted from Gadkowski (2007, table 2).
There are some similarities, but also notable differences, between city
academies and U.S. charter schools. The latter are public (i.e., state)
schools set up from charters typically drawn up by groups of educa-
tors, parents, and community leaders (some are converted from exist-
ing public schools, although a small number were once private
schools). Like U.S. district public schools and U.K. city academies,
they receive public funding according to the number of students
attending (although, in a number of states, they do not receive the full
equivalent of their district counterparts). Unlike traditional district
schools, most charter schools do not receive funding to cover the cost
of premises and operating. Most rely on independent means to fund
their capital costs (even if some states may offer financial help with
startup costs). It is probably fair to say that, at least currently, acade-
mies remain more closely tied to the state system than do the majority
of U.S. charter schools.
The city academies program was introduced by David Blunkett, the
then secretary of state for education, in a speech in March 2000, and
the first projects were announced in September 2000. The first three
academies were established in September 2002. Nine more opened in
Table 10.6
City Academies Opened in September 2002 to September 2005
228
The Business Academy, Bexley Outer London September 2002 Garrard Education Trust—£2.5 Business and enterprise
million
Greig City Academy, Haringey Inner London September 2002 Greig Trust and Church of Technology (especially
England £1.7 million ICT)
Unity City Academy, Middlesbrough North East September 2002 Amey plc—£1.9 million Applied enterprise
Capital City Academy, Brent Outer London September 2003 Sir Frank Lowe—£2 million Sports and art
The City Academy, Bristol South West September 2003 Bristol City Football Club and the Sports
University of the West of England
£1.7 million
The West London Academy, Ealing Outer London September 2003 Reed Executive plc £2 million Sports and enterprise
Manchester Academy, Manchester North West September 2003 United Learning Trust (The Business and enterprise,
Church Schools Company), and art
Manchester Science Park Ltd—
£1.3 million
The King’s Academy, Middlesbrough North East September 2003 Emmanuel Schools Foundation— Business and enterprise
£2 million
Djanogly City Academy, Nottingham East Midlands September 2003 Sir Harry Djanogly ICT
City of London Academy, Southwark Inner London September 2003 Corporation of London—£2 Business and enterprise
million and sports
The Academy at Peckham, Southwark Inner London September 2003 Lord Harris of Peckham—£3 Business and enterprise,
million and performing arts
Walsall City Academy West Midlands September 2003 Mercers’ Company and Thomas Technology
Telford Online—£2.5 million
London Academy, Barnet Outer London September 2004 SGI Limited—£1.5 million Business, enterprise, and
technology
Mossbourne Community Academy, Inner London September 2004 Sir Clive Bourne, Seabourne Technology
Stephen Machin and Joan Wilson
Haberdashers Aske’s Hatcham Inner London September 2005 Haberdashers’ Livery Company ICT and music
College Academy, Lewisham £0.7 million
Dixons City Academy, Bradford Yorkshire and September 2005 Dixons CTC Trust £0.6 million Performing arts and
The Humber product design
Academy of St. Francis Assisi, North West September 2005 Diocese of Liverpool and The Environment
Liverpool Roman Catholic Archdiocese of
Liverpool—£1 million
Macmillan Academy, West North East September 2005 Macmillan CTC £0.4 million Science and PE, and
Middlesbrough outdoor education
229
Table 10.7
City Academies, 2006
All City City academies
secondary academies share
Number of schools 3358 27 .008
Number of FTE pupils 3298185 25196 .008
Number of FTE teachers 199131 1717 .009
Pupil-teacher ratio 16.8 14.8 n/a
Note: Authors’ own calculations using various data sources.
Table 10.8
School-Level Changes in GCSE Exam Performance in Schools Changing to Academy
Status and in Comparison Schools—% Getting 5 or More A*-C GCSEs
A. Academies Opening in September 2002
Post-academy,
Pre-academy, 2002–03 to
2000–01 2005–06 school Post-pre
school year years (averaged) change
Academies (3) 20.5 31.2 10.7
Matched schools (3) 21.7 36.2 14.5
D-i-D ¼
3:8 (10.1)
All other state schools in 37.2 48.4 11.2
LEA (23)
D-i-D ¼
0:5 (8.3)
National average 50.0 55.7 5.7
B. Academies Opening in September 2003
Post-academy,
Pre-academy, 2003–04 to
2001–02 2005–06 school Post-pre
school year years (averaged) change
Academies (8) 23.4 37.5 14.1
Matched schools (10) 29.2 39.6 10.4
D-i-D ¼
3.7 (9.5)
All other state schools in 39.4 46.4 7.0
LEA (106)
D-i-D ¼
7.1 (7.2)
National average 51.5 56.7 5.2
Table 10.8
(continued)
D. Academies Opening in September 2005
Pre-academy, Post-academy,
2003–04 2005–06 Post-pre
school year school year change
Academies (10) 46.0 55.6 9.6
Matched schools (9) 42.6 51.3 8.7
D-i-D ¼
0.82 (16.9)
All other state schools in 42.0 51.2 9.2
LEA (191)
D-i-D ¼
0.36 (13.1)
National average 53.7 59.2 5.5
Note: Column 1: number of observations in parentheses. Three out of 27 academies are
new schools (one opening in 2003–04 and two opening in 2004–05). Three out of 27
academies each replace two predecessor schools (for one of the academies opening in
2002–03 and two opening in 2003–04). For one of the academy schools opening in 2002–
03 its two predecessor schools have the same match school. Column 4: D-i-D denotes
difference-in-difference. Robust standard errors in parentheses.
2002–03 9.7 (7.5) 18.0 (5.5) Becomes academy 5.3 (10.8) 27.5 (6.6) 7.1 (13.6) 3.5 (10.5)
2003–04 6.7 (7.6) 20.0 (5.0) 3.4 (7.2) 11.7 (5.4) Becomes academy 3.4 (12.6) 4.0 (9.8)
2004–05 3.3 (12.4) 14.1 (10.1) 1.2 (8.7) 7.5 (6.4) 1.7 (10.0) 20.5 (7.0) Becomes academy
2005–06 0.3 (10.3) 10.8 (8.6) 3.0 (7.8) 7.7 (4.4) 3.0 (7.3) 15.0 (5.0) 4.3 (11.2) 4.4 (8.7)
Note: Robust standard errors in parentheses.
235
Table 10.10
School-Level Difference-in-Difference Estimates of City Academy Status on GCSE Performance, 1995–96 to 2005–06
236
for free school meals, proportion nonwhite. GCSE performance is measured by the percentage of pupils getting 5 or more A*-C GCSE grades.
Public and Private Schooling Initiatives in England 237
As noted, it is possible that the pupil mix may have changed as the
school changed status to become an academy. It turns out that pupil
mobility among students in predecessor schools is low and most who
were there at key stage 3 (aged thirteen/fourteen and in school year
nine) also take their GCSEs two years later in the academy. We have
therefore considered value added-models at the pupil level that are
able to address this possible issue of changing pupil mix. They are
reported in table 10.11. One difference is that, because of our availabil-
ity of pupil-level data, only three cohorts can be considered. Nonethe-
less, in the second and third cohorts (respectively those opening in
September 2003 and 2004) there are positive (small but mostly statisti-
cally significant) impacts on pupil value-added. Thus while standards
tended to not rise so much on average, there is some evidence that
value-added improved significantly in some of the schools that were
granted academy status.
Pupil-Level Value-Added Models of Progression from Key Stage 3 to Key Stage 4 (GCSE ), 2001–02 to 2004–05
Dependent variable: Pr(5 or more A*-C GCSEs)
Academies opening in Academies opening in Academies opening in
September 2002 September 2003 September 2004
One-on-one Other state One-on-one Other state One-on-one Other state
matched schools matched schools matched schools
schools in LEA schools in LEA schools in LEA
(1) (2) (3) (4) (5) (6)
Becomes academy 0.49 0.22 0.24 0.23 0.78 0.48
(0.12) (0.12) (0.17) (0.12) (0.26) (0.23)
Controls for key stage 3 achievement Yes Yes Yes Yes Yes Yes
School fixed effects Yes (6) Yes (27) Yes (18) Yes (114) Yes (6) Yes (86)
Year dummies Yes (3) Yes (3) Yes (3) Yes (3) Yes (3) Yes (3)
R-squared .77 .37 .31 .16 .30 .13
Number of pupils 4706 19862 11383 81862 3932 60902
Number of schools 7 26 21 108 6 81
Note: Coefficient estimates (robust standard errors); both 100 to maintain comparability with tables 10.8, 10.9, and 10.10.
Stephen Machin and Joan Wilson
Public and Private Schooling Initiatives in England 239
Notes
We would like to thank Rajashri Chakrabarti, Susan Dynarski, Tom Kane, Sandra
McNally, Paul Peterson, and an anonymous referee for a number of helpful comments
on an earlier draft.
1. See Le Grand (1991, 1993) and the more recent discussion of the quasi-market in
Machin and Vignoles (2005).
2. The compulsory minimum school-leaving age was raised again in 1973 to sixteen, the
level at which it currently stands. It is expected that it will be raised to eighteen in
England by 2015 (see BBC News, November 6, 2007: hhttp://news.bbc.co.uk/1/hi/
education/7080699.stmi).
3. The 1988 Act established parental representation on school governing bodies and
required Local Education Authorities (LEAs) to delegate staff recruitment and financial
management to the board of school governors (Machin and Vignoles 2005).
4. Private schools have charitable status and so their fee income is not taxed.
5. Source: hhttp://www.teachernet.gov.uk/management/resourcesfinanceandbuilding/
funding/schoolsprivatefinanceinitiative/faqs/i.
6. Specifically, sponsors ‘‘make a charitable donation of 10% of the building costs, up to
a total of £2 million (or £1.5 m for an Academy based on remodelled rather than
completely new buildings) towards the initial capital cost of their Academy.’’ Capital
contributions of the sponsor are expected to be made over the length of the building proj-
ect (two to three years). Source: hhttp://www.standards.dfes.gov.uk/academies/pdf/
AcademySponsorProspectus2005.pdf?version=1i. These contributions may be replaced
with sponsor-provided long-term endowment funds, of equivalent financial value,
for academies opening in the future (NAO 2007). Following further changes made to
the academies programme in 2007, the 2 million funding requirement is waived when the
sponsor is a university, a fee-charging private school, or a high-achieving state school
(Sibieta et al. 2008).
7. An academy usually has around thirteen governors, typically seven of whom are
appointed by the sponsor. Of the remaining six, one must be a local authority representa-
tive, and at least one elected parent representative is required.
8. Staff usually transfer directly from the predecessor school to the academy school, and
their existing employment terms and conditions are legally protected. Source: hhttp://
www.standards.dfes.gov.uk/academies/what_are_academies/organisation/?version=1i.
Table 10.5 shows that more than half of the academy school set up by September 2005
were in the inner and outer London regions (14 of the 27 listed). This reflects government
targets requiring 60 of the first 200 academy schools to be established in London (NAO
2007).
9. The autonomy of academies relative to other state schools seems to extend to their pol-
icy on pupil expulsions. In the academic year 2005–06, academy schools permanently
excluded 5.5 pupils in every 1,000. The comparative figure for other state secondary
schools in England was 2.4 in every 1,000 (See BBC News story July 13, 2007, hhttp://
news.bbc.co.uk/1/hi/education/6897429.stmi).
10. We list only those academy schools set up in September 2002 through September 2005
because to date we do not have pupil examination performance data covering academies
240 Stephen Machin and Joan Wilson
opening in subsequent years. However, as of August 2007, there were forty-six acade-
mies open (the twenty-seven listed in table 10.5, plus nineteen that opened in September
2006) and many more are intended to follow (the current U.K. government has unveiled
plans to establish 400 academies, with at least 200 of these open or planned to be opened
by 2010).
11. GCSEs are the examinations taken at the end of the final year of compulsory school-
ing (in year eleven at age fifteen/sixteen). GCSEs were first introduced in 1986, to GCE
O-Level and the Certificate of Secondary Education (CSE) qualifications. The first GCSE
exams were sat in 1988 and were originally graded from A to G. Nowadays pupils take
a number of GCSEs, which differ across schools, in different subjects, and these are
assigned pass grades ranging from A through G. The A grade was first implemented
in 1994 as a means of classification for outstanding examination achievement. The cur-
rent key headline figure at school level is the percentage of children achieving five or
more GCSEs with grades A through C. All Academies open in September of a given
year, and comparison of final school year exams in the Academy schools relative to the
national average is based on the results of GCSE exams taken in the summer of the fol-
lowing year.
12. Specifically, our pre-policy matching is based on school-level data from the academic
year 1995–96 to the academic year prior to the one in which the school became an acad-
emy (since we have school-level data available from 1995–96 onward). As a third crite-
rion we also look for similarities between the match school and the pre-academy school
using their school type (in the maintained sector other school types are community, vol-
untary aided, voluntary controlled, foundation, or city technology college). Finally, we
also considered the nearest school in geographical terms as a spatially matched control
group, with similar findings to those reported.
13. These numbers also show that, in terms of GCSE performance, the schools that be-
came academies were right near the bottom of the pile in national terms before becoming
academies (for example, in the 2001–02, 2002–03, 2003–04, and 2004–05 academic years
the national averages were 51.5, 52.9, 53.7, and 57.1 percent, respectively).
14. School fixed effects involve controlling for time-invariant characteristics of schools.
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Public and Private Schooling Initiatives in England 241
Harry A. Patrinos
Forms of Contracts
Table 11.1
Selected Education Contracting Examples and Evidence Base
Private finance
Voucher-type programs Charter-like schools initiative
OECD countries
Denmark* United States**** Australia
Italy* United Kingdom** Canada
Netherlands** Germany
Sweden*** Ireland
United States**** United Kingdom
Developing/transition countries
Chile** Colombia*** Colombia
Colombia**** Fe y Alegria** Mexico
Czech Republic**
Notes: Strength of evidence: * weak; ** strong; *** very strong; **** excellent (randomized)
Source: Author’s compilation.
Education Contracting 247
Evidence
programs is increasing rapidly over time, most of the research is for the
United States. Meanwhile, there are some very interesting programs in
developing and transition countries that are not receiving much atten-
tion. More research could help us uncover whether cross-country dif-
ferences in the operation and funding of schools matter for student
achievement.
It would appear that competition matters. Most studies show im-
provements in public schools over time that are subject to competition
from private schools in the local education market. This is the case
in more developed countries, such as the United States, Sweden, the
Czech Republic, and the Netherlands; but not in Denmark, and proba-
bly not in Chile. While all nonrandomized studies are problematic to
some extent, the lack of over-time data (Netherlands, Denmark), lack
of preprogram data (Chile), and difficulties controlling for selection or
sorting (Netherlands, Czech Republic, Denmark) make some of the
studies suspect. At a minimum, evaluations of such programs should
be done over time, with data covering several years before the imple-
mentation and at least a few years after program launch.
The fundamental problem in estimating the impact of voucher pro-
grams is that students and schools often self-select into the program
(the selection problem). In this case a comparison between students
who participate and those who do not participate confounds the effects
of the program with the initial differences in characteristics between
participants and nonparticipants. It is likely that better informed
households are more likely to apply to voucher programs. In this case,
students from better informed and more active households may per-
form differently than students who did not apply to the program.
Therefore, any observed final educational outcomes not only comprise
the results from the voucher program but also the inherent differences
in characteristics of the families or students. One possible solution in
order to evaluate outcomes in established school choice programs
might be to experiment with the motivation to participate. That is, pol-
icy makers could offer more information on the benefits of vouchers,
for example by publishing test scores, to a targeted group of families
in disadvantaged economic conditions.
Many researchers rely on the instrumental variables (IV) approach,
which uses a variable with two characteristics: it can explain participa-
tion in the program but is uncorrelated with the outcome measures of
interest. Clearly, the main problem of the IV approach is validity. The
majority of available variables that are correlated with participation
Education Contracting 255
are correlated with the outcome as well. Even when one finds a vari-
able correlated with participation, it is impossible to test whether it is
uncorrelated with the unobservable part of the outcome variable. The
other potential methods—Heckman correction models, difference-in-
difference estimators, and matching estimators—are based on strong
assumptions.
The need for more evaluations using strong designs is clear. Voucher
programs are ideal settings in which to design experimental setups.
The demand for education is increasing, and the resources are scarce.
In this case, allocation of benefits by lottery will ensure horizontal eq-
uity and transparency to the process. In the event that the voucher is
targeted using a proxy index, then the program can be evaluated by re-
gression discontinuity design (RDD), given unbiased estimators. The
RDD estimation is possible if the program identified its beneficiaries
using an assignment variable. For example, if selection was based on a
proxy-mean index, then regression discontinuity analyses could poten-
tially be used in such cases, since they make use of the assignment
variable and the observations with scores close to the cutoff point for
program eligibility. If all those with a score below a certain cutoff are
beneficiaries and those with a score above the cutoff are denied access
to the program, then students with scores just below the cutoff point
(beneficiaries) are very similar to students above the cutoff point (com-
parison group). Thus, it is possible to compare the outcome variables
for those two groups and attribute the differences to the program.
Social issues and vouchers must be on the research agenda. Vouch-
ers and other forms of private participation should not only be as-
sessed in terms of efficiency in improving test scores, but also in terms
of their impact on social tensions. It could be that without institutional
control, private schools may teach racism and religious intolerance,
thus exacerbating social tensions. These are important empirical ques-
tions that must be included in future research. For example, in the case
of Pakistan, recent findings on the enrollment numbers differ by an
order of magnitude from those reported by and in the media. The reli-
gious school sector (madrasa) is small compared to educational options
such as public and private schooling, accounting for less than 1 percent
of overall enrollment in the country (Andrabi and others 2006).
The evaluation of programs is fundamental for the selection of suc-
cessful public policies. In effect, a positive evaluation may lead to the
realization of the importance of investing part of the national budget in
a program with proven results. A negative evaluation, on the contrary,
256 Harry A. Patrinos
may imply considerable savings for the public treasury since it is pos-
sible to cancel programs that, without the evaluation, would have con-
tinued and maybe even been extended.
There is a need for multi-country, -institutional, and -year research,
with various sources of funding, and a common methodological frame-
work, under a common organizing framework. The research could go
beyond analyzing what works and explain why it works, how, and
under what circumstances.
Notes
1. Trends in International Mathematics and Science Study (TIMSS) and Program for In-
ternational Student Assessment (PISA).
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Contributors
Felipe Barrera-Osorio
World Bank
Cristian Bellei
Harvard University
Eric P. Bettinger
Case Western Reserve University
Rajashri Chakrabarti
Federal Reserve Bank
Geeta G. Kingdon
University of Oxford
Michael Kremer
Harvard University
Norman LaRocque
Education Forum
Stephen Machin
University College London
Karthik Muralidharan
University of California–San Diego
Thomas J. Nechyba
Duke University
Harry Anthony Patrinos
World Bank
Paul E. Peterson
Harvard University
260 Contributors
Joan Wilson
London School of Economics
Ludger Wößmann
University of Munich
Index
peer effects and, 54–55 Peterson, Paul E., 3–11, 13, 247–248
vertical differentiation and, 56–59 Philadelphia, 75
Peer effects Philippines, 5, 81–82
cross-type, 55–56 Plan de Ampliación de Cobertura de la
equilibrium and, 54–55 Educación Secundaria (PACES)
horizontal differentiation and, 54–56 background of, 145–148
positive, 47 lotteries and, 143–156, 159, 162
socioeconomic status and, 180 poor families and, 145
vertical differentiation and, 56–59 pupil-teacher ratios and, 145
Penn World Tables, 126 regression analysis of, 145–163
Performance. See also Regression analysis subsidies and, 152–153
Aþ Plan and, 247–248 valid ID and, 146–148
achievement scores and, 119–121 voucher effects and, 150–163
alternative empirical specifications and, Policy
27–30 ability tracking and, 58–59
Chile and, 167–172 Chile and, 165–191
city academies and, 230–237 city academies and, 225–237
Colombia and, 143–163, 193–216 Colombia and, 143–163, 193–217
competition effect and, 101–103, 168, 189, complex challenges for, 48–51
245, 247–249, 254 concession schools and, 194
concession schools and, 193–195, 198–216 constraint definition and, 48–49
examination boards and, 111 contracting and, 71–86
funding effect and, 26–27 cream skimming and, 47, 56–59, 65–66
further research for, 253–256 design lessons for, 84–86
General Certificate of Secondary Educa- Direct Payment Agreement and, 127
tion (GCSE) and, 230–234, 237, 239n11 economic issues and, 48–49
Herfindahl index and, 249 Education Act and, 220
India and, 104–105, 111–112, 119–122 education contracts and, 245–256
instrumental variable methods and, 112, Education Reform Act and, 220
254–255 equilibrium and, 48–50, 52, 54–57
mathematics and, 13, 17, 30, 32–35 (see Florida’s accountability law and, 247–248
also Mathematics) free riders and, 51–52
policy design and, 85 future, 245–256
Program for International Student government red tape and, 78
Assessment (PISA) and, 5, 13, 16–18, 28, horizontal differentiation and, 54–56
32 housing choices and, 47, 59–65
propensity-score matching and, 112 income heterogeneity and, 53
pupil fixed-effects approaches and, 112 India and, 91–108
quality and, 70, 80 (see also Quality) introducing politics and, 53–54
reading and, 13, 17, 33, 38, 41, 121–125, new form of public-private partnerships,
155, 161–162, 198, 204, 208, 214, 248 130–133
relative effectiveness and, 118–122 parents and, 49
science and, 13, 17, 33, 41, 191n8, 249, pedagogical targeting and, 47, 54–56
256n1 Plan de Ampliación de Cobertura de la
selection bias and, 25–27, 35–36 Educación Secundaria (PACES) and,
study results on, 30–40 143–144, 155–156, 159
systemic effects and, 167–169 private sector mobilization and, 47–67
teacher promotions and, 122–123 real world outcomes and, 49
treatment effect models and, 112 resource efficiency and, 47, 51–54
Trends in International Mathematics and Right to Education Bill and, 9, 107, 130–
Science Study (TIMSS) and, 249, 256n1 132, 134
vouchers and, 252 (see also Vouchers) Salary Distribution Act and, 127
268 Index
Vouchers (cont.)
targeting policies and, 62–67
teacher unions and, 132
United States and, 3, 6–7, 132
Zeira, Joseph, 24