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2. Parent behavior and yardstick competition: Evidence from Chile’s national voucher program

Autor: Gregory Elacqua

This paper develops a model of school behavior in a competitive marketplace, where parents choose whether or not to remain in their current school or change schools, using local schools to evaluate the performance of their child's school.  Parents are assumed to make comparisons between schools to overcome asymmetric information.  This forces schools into a “yardstick competition” in which they care about what other local schools are doing.  I provide a theoretical framework and empirical evidence using a unique panel georeferenced data set I’ve constructed to examine the extensive and long running system of school choice in Chile.  The results are encouraging to the view that the level of quality a school chooses affects its chances of maintaining and increasing enrollments.   The findings also suggest that school behavior can be affected by parents using neighboring schools as a benchmark.  While differential behavior is also found across private voucher school types (for-profit and non-profit) and across socioeconomic groups, the differences do not always comport with theory.

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