Association for Public Policy Analysis & Management

Milton Friedman (1955) argued that a system of educational choice would allow for competition, which would therefore improve the quality of education in society. While around 9 out of every 10 students attend state funded, K-12 public schools, (U.S Department of Education) the majority of states have enacted private school choice programs that give families choices in where to send their children. Traditional vouchers are state-funded scholarships that allow families to opt their children out of their residentially assigned government schools and use publicly raised education funding to attend a private school that would work best for them. Private schools must meet specific requirements before being eligible to receive voucher funding. Education vouchers level the playing field by allowing students who usually wouldn’t have access to choose a different school.

While Hess (2010), McShane (2015), and Chubb and Moe (1990) all discuss the importance of focusing on the supply-side of private school choice, little empirical evidence exists on the supply-side effects of private school choice programs. Since schools have autonomy in whether they participate in voucher programs, research suggests that lower quality – as measured by tuition and enrollment – private schools are more likely to participate in more highly regulated voucher programs. (Sude, DeAngelis , & Wolf, 2017). In addition, evidence suggests that more heavily regulated voucher programs could reduce the quantity (Mills & Wolf, 2017) and specialization of private schools available to children in need (DeAngelis & Burke, forthcoming).

Are private school choice programs across the country affecting the supply of private schooling overall? In theory, private school vouchers ought to increase private school enrollment and encourage market entry, as they bolster the demand for private schooling overall. Our study empirically examines whether these voucher programs actually increase supply of private schooling in three locations in the United States. This is the first study that empirically examines the effects of voucher program demand on private school supply overall. Using school and year fixed effects regression models, we find that voucher programs slightly increase private school enrollment in Louisiana, Indiana, and DC by around six percent. Research on whether these enrollment increases actually lead to market entry would be particularly informative and beneficial for the current education policy debate.