Targeted Vouchers, Competition Among Schools and the Academic Achievement of Poor Students


I develop a model of supply and demand with imperfect competition to study the primary education market in Chile. I use this framework to empirically analyze how voucher policy affects competitive incentives for schools to supply quality. First, I show descriptive and causal evidence that the introduction of a voucher targeted at poorer students led private schools to improve quality, especially in the poorest neighborhoods. Then, I use my estimated demand model to quantify the mechanisms that incentivized for-profit schools to improve. My estimates indicate that schools mark down quality below the competitive benchmark, and this markdown is larger in poorer areas. The targeted voucher policy induced nuanced changes in the two mechanisms that drive the observed improvements in quality in my model market power and marginal revenue. The results indicate that the policy improved equity by providing more resources and increasing competition in neighborhoods where incentives to invest in quality are weakest.

Current Working Paper (under review at Econometrica)

Most Current Working Paper - May 2021

Most Current Online Appendix - May 2021

Supplements to Online Appendix

Supplement on Defining Schooling Markets - May 2021

Supplement on School Spending - May 2021

Supplement on School Income - May 2021

Supplement on School Value Added - May 2021

Supplement on Voucher Rules - May 2021

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Article Appendix
  • Published: Econometrica (R&R)
  • Date: 2021
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