Association for Public Policy Analysis & Management

One-quarter of US students now attends a school other than the traditional public school. This more market-driven system could increase competition among schools, force the worst-performers to close and increase school quality over time--what some economists call "creative destruction." On the other hand, schooling does not satisfy the usual conditions for well-functioning markets, which could mean market forces do not improve efficiency. In this study, we examine the trends and levels of closure across the United States among traditional public, charter, and private schools. Our preliminary results show that the charter closure rate is more than 4 times higher than traditional public schools. The results for private schools, while more tentative, are also higher than for traditional public schools. The charter closure rates also vary widely across states (min: 1%; max: 18%). Finally, we show that all improvement in school quality can be decomposed into three parts: closure/takeover of low-performing schools, improvement in persisting schools and re-allocation of student enrollments across school types. Our initial analyses from New Orleans data shows that the improvement in the city's schools since the start of the post-Katrina school reforms has been due entirely to school takeover/closure. Schools that persisted did not improve and generally worsen over time. We are in the process of merging in outcome data to allow us to extend this decomposition analysis to a national scale and to other sectors.