The Distributional Consequences of Public School Choice
School choice systems aspire to delink residential location and school assignments by allowing children to apply to schools outside of their neighborhood. However, the introduction of choice programs affect incentives to live in certain neighborhoods, which may undermine the goals of choice programs. We investigate this possibility by developing a model of public school and residential choice. We consider two variants, one with an exogenous outside option and one endogenizing the outside option by considering interactions between two adjacent towns. In both cases, school choice rules narrow the range between the highest and lowest quality schools compared to neighborhood assignment rules, and these changes in school quality are capitalized into equilibrium housing prices. This compressed distribution generates incentives for both the highest and lowest types to move out of cities with school choice, typically producing worse outcomes for low types than neighborhood assignment rules. Paradoxically, even when choice results in improvement in the worst performing schools, the lowest type residents may not benefit.
We are grateful to Arda Gitmez, Ed Glaeser, Richard Romano, and Tim van Zandt for superb comments. Pathak thanks the National Science Foundation for financial support under award SES-1056325. Avery thanks INSEAD for hospitality, as much of this paper was written while he was a visiting scholar at INSEAD. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Christopher Avery receives funding from The College Board to support his work as Co-Principal Investigator of a research collaboration between the College Board and the Center for Education Policy Research at the Harvard Graduate School of Education.Parag A. Pathak
Pathak is on the scientific advisory board of the Institute for Innovation in Public School Choice, a non-profit 501(c) that provides assistance to school districts on the implementation of school choice systems.