Panel Paper: The Equilibrium Effects of Informed School Choice

Saturday, November 10, 2018
Wilson B - Mezz Level (Marriott Wardman Park)

*Names in bold indicate Presenter

Claudia Allende, Columbia University, Francisco Gallego, Pontificia Universidad Católica de Chile and Christopher Neilson, Princeton University

This paper studies the effects of a policy designed to generate a more informed consumer demand in the context of primary education markets. We develop and test a specific information intervention that targets poor 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 school choice decisions towards schools with higher test scores, higher prices and further distances from their home. Four years later, we find that student achievement and school satisfaction were higher among treated families. To quantitatively gauge how average treatment effects might vary in the context of a scaled up version of this policy, we embed the RCT within a structural model of school choice and competition where price and quality are chosen endogenously but schools face capacity constraints. We find that while capacity constraints play an important role mitigating the policy effect on impact, the supply-side responses to quality contribute to a higher average treatment effect than that found in the RCT context. This result is especially true for the poorest students that benefit the most from an increase in supply of quality in their local education markets.