Approximating The Equilibrium Effects of Informed School Choice

Abstract

This paper studies the potential small and large scale effects of a policy designed to produce a more informed consumer demand in the context of the market for primary education. We develop and test a personalized information provision intervention that targets families of public Pre-K students entering the elementary school system in Chile. Using a randomized control trial, we find that the intervention shifts parents' choices toward schools with higher average test scores, higher value added, higher prices, and schools that tend to be further from their home. Tracking students using administrative data, we find that student academic achievement on test scores was approximately 0.2 standard deviations higher among treated families five years later. To quantitatively gauge how average treatment effects might vary in the context of a scaled up version of this policy, we embed the randomized control trial within a structural model of school choice and competition where price and quality are chosen endogenously and schools have capacity constraints. We use the estimated model of demand and supply to simulate policy effects under different assumptions about equilibrium constraints. In counterfactual simulations, we find that capacity constraints play an important role mitigating the policy effect on impact but in several scenarios, the supply-side responses leads to increased quality which contributes to a overall positive average treatment effect. Finally, we show how model estimates using the RCT can be used to inform the design of a large scale experiment such that reduced form estimates can capture equilibrium effects and spillovers.

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  • Coauthors: Claudia Allende, Francisco Gallego
  • Date: 2019
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