Education Program

April 30, 2009
Caroline Hoxby, Organizer

Jonathan Gruber, MIT and NBER,Susan Dynarski, University of Michigan and NBER , and Danielle Li, MIT
Cheaper by the Dozen: Using Sibling Discounts at Catholic Schools to Estimate the Price Elasticity of Private School Attendance

The effect of vouchers on sorting between private and public schools depends upon the price elasticity of demand for private schooling. Estimating this elasticity is empirically challenging because prices and quantities are jointly determined in the market for private schooling. Gruber, Dynarski, and Li exploit a unique and previously undocumented source of variation in private school tuition to estimate this key parameter. A majority of Catholic elementary schools offer discounts to families that enroll more than one child in the school in a given year. Catholic school tuition costs therefore depend upon the interaction of the number and spacing of a family’s children with the pricing policies of the local school. This within-neighborhood variation in tuition prices allows the authors to control for unobserved determinants of demand while still identifying the price parameter. They find that a standard deviation decrease in tuition prices increases the probability that a family will send its children to private school by one half percentage point, which translates into an elasticity of Catholic school attendance with respect to tuition costs of -0.22. Their subgroup results suggest that a voucher program would disproportionately induce into private schools those who, along observable dimensions, are unlike those who currently attend private school.

Philip Babcock and Kelly Bedard, UC, Santa Barbara
Wage Gains from Failure: New Evidence on School Retention Policies and Long-run Outcomes

By estimating differences in long-run education and labor market outcomes for cohorts of students exposed to differing state-level primary school retention rates, Babcock and Bedard estimate the effects of retention policy on all students in a cohort, retained and promoted. They find that a one standard deviation increase in early grade retention is associated with a 0.6 percent increase in mean male hourly wages. Further, the observed positive wage effect is not limited to the lower tail of the wage distribution but appears to persist throughout the distribution. Although there is an extensive literature attempting to estimate the effect of retention on the retained, this analysis offers what may be the first estimates of average long-run impacts of retention on all students.

Asim Khwaja, Harvard University and NBER, Tahir Andrabi, Pomona College, and Jishnu Das, The World Bank
Report Cards: The Impact of Providing School and Child Test Scores on Educational Markets

Recent evidence on the impact of information provision on service delivery has been mixed, with overall outcomes even worsening in certain cases. Khwaja, Andrabi, and Das examine the market-wide impact of an experimental intervention that provides school and child-level learning report cards in half of 112 educational markets (villages) in Pakistan. They track all 823 public and private primary schools, 12,000 children in Grade 3, 5,000 teachers, and a sample of 1,800 households in these villages. Report card provision improves learning by 0.10 standard deviations and decreases private school fees by 21 percent, with little increase in the switching of schools by children. The researchers argue that providing report cards generates credible competitive pressures on all schools to increase price-adjusted quality, with the specific tool used -- decreasing prices or raising quality -- determined by the nature of production costs and market demand. Consistent with this, the authors find substantial heterogeneity in the impact across schools. Initially “bad” (below median baseline test scores) private schools respond by increasing quality - showing learning gains of 0.34 standard deviations - or shutting down, but show limited fee changes. In contrast, initially “good” (above median) private schools show no learning gains, but drop fees substantially. Government schools see a tenth of a standard deviation increase in learning. Moreover, the researchers find schools increase investments, while there is little evidence of greater (direct) parental investments. The results show the cost of providing information is similar to the school fee drop, and the intervention likely raised child welfare by increasing learning and lowering educational costs.

Felipe Barrera-Osorio and Dhushyanth Raju, The World Bank
Evaluating a Test-based Public Subsidy Program for Low-cost Private Schools: Regression-discontinuity Evidence from Pakistan

Barrera-Osorio and Raju estimate the causal effects of a public subsidy program targeted at low-cost private schools in Pakistan on school size, student learning, and schooling inputs. Program benefits are a monthly per-student subsidy and annual monetary bonuses to teachers and schools based on school performance on a specially-designed independent academic test. Both initial (program entry) and continued benefit eligibility are tied to, among other things, achieving stipulated minimum student pass rates on the test. This allows for the application of regression-discontinuity (RD) methods to identify and estimate program impacts at the minimum pass rate. Data on the latest two rounds (phase-3 and phase-4) of program applicants are used in this study. Modeling the entry process of phase-4 test takers as a sharp RD design, the authors find large positive effects on the number of students, teachers, classrooms, and blackboards emerging within a short treatment period. In contrast, given the presence of crossovers arising from test retaking, modeling the entry process of phase-3 test takers as a partially fuzzy RD design, the researchers find no evidence of significant program impacts. They posit that the latter finding is probably because of weak identification arising from a small jump in the probability of treatment at the minimum pass rate. They note, however, that the evidence on program effects on student achievement is pending, as the data collection has not been completed.

Martin West, Brown University and LUDGER WÖßMANN, University of Munich
Every Catholic Child in a Catholic School: Historical Resistance to State Schooling, Contemporary Private Competition, and Student Achievement across Countries

Nineteenth-Century Catholic doctrine strongly opposed state schooling. West and Wößmann show that countries with larger shares of Catholics in 1900 (but without a Catholic state religion) tend to have larger shares of privately operated schools even today. The researchers use this historical pattern as a natural experiment to estimate the causal effect of contemporary private competition on student achievement in cross-country student-level analyses. Their results show that larger shares of privately operated schools lead to better student achievement in mathematics, science, and reading and to lower total education spending, even after controlling for current Catholic shares.

Scott Imberman, University of Houston, Adriana Kugler, University of Houston and NBER, and Bruce Sacerdote, Dartmouth College and NBER
Katrina's Children: A Natural Experiment in Peer Effects from Hurricane Evacuees

In 2005, hurricanes Katrina and Rita induced the largest internal migration ever in the United States. As a byproduct, a large number of children had to evacuate the Gulf coast areas of Louisiana, Mississippi, and Alabama and relocate to schools across the Southeast. Many school districts tried to enroll the evacuees in their schools as quickly as possible. At the same time, families in the receiving districts worried about disruption in the schools and decreased resources for non-evacuee students. Using data from Houston, TX and from Louisiana, co-authors Imberman, Kugler, and Sacerdote investigate the extent to which the arrival of Katrina and Rita evacuee peers adversely affected the academic performance and behavior of native students. On average, they find that increases in the share of evacuees moderately reduced elementary test scores for math in Houston and secondary reading test scores in Louisiana. Moreover, non-linear models show evidence of monotonicity in Houston and boutiquing in Louisiana. In Houston, the influx of low quality evacuees hurt all natives, while the entry of high quality evacuees helps all natives. By contrast, in Louisiana, the influx of low (high) quality evacuees has a bigger negative (positive) effect on natives as they get better. The researchers also find that the influx of Katrina evacuees decreased attendance rates of native students, suggesting that peer effects work through both cognitive and behavioral channels. These results are robust to an instrumental variables strategy and a placebo experiment. The authors also see little evidence to suggest that these impacts are coming through changes in class size, per-student expenditures, teacher experience, or school switching among native students -- this suggests that the impacts are indeed working through peer effects.

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