Competitive Effects of Means-Tested School Vouchers

David Figlio, Northwestern and NBERCassandra Hart, Northwestern

December 2009

Introduction• School choice options have become increasingly

prevalent in recent years• Considerable attention paid to potential competitive

effects of choice, both positive (efficiency) and negative (cream-skimming)

• Challenging to gauge competitive effects because of interrelationship between private school supply and public school performance

• Prior literature: cross-sectional studies of private school penetration in US and international; Milwaukee vouchers; Florida school grades; Sweden voucher program introduction; Chile voucher cross-section

This paper

• Study introduction of large new school voucher program; use introduction of this program as source of plausibly exogenous variation that increased demand for private school options after 2001

• Look at quantity and variety of nearby private school options in year prior to program announcement, which could generate variation in access to the program

• Florida is large and varied in its pre-program private school supply

• Identifying off of a policy change; use student data from 99-00 through 06-07

How vouchers might affect public schools

• Competition effect• Composition effect• Resource effect

• First year of program was before any students left the public schools – but were applying

• Work in progress: still trying to tease out three effects in the “mobility” years of the program

Florida’s Corporate Tax Credit Scholarship Program

• Funded by fully tax creditable corporate contributions to one of three Scholarship Funding Organizations, each with geographic range; total contributions capped by Legislature

• Began with 20,000+ students, now at 27,000+ students• Students below 185% of poverty line and attending

public school in prior year (or entering grades K/1) eligible; renewal requires income below 200% of poverty line

• Initial voucher was $3,500; now, it’s $3,950-$4,100 (around 90% of average “rack rate” religious school tuition/fees in Florida)

Private school landscape in Florida

• 2000 Census 5% microdata sample: 11.4% of Florida students 6-17 attended private schools; 5.4% of income-eligible students attended private schools

• Large regional variation in private school penetration at MSA level

• Considerable within-MSA variation as well (wait a few slides)

Regional variation in private school penetration in 2000 Census

Data

• (Standardized) student test scores, basic demographics from 1999-2000 through 2006-07 from Florida Education Data Warehouse– Developmental scale scores employed, grades 3-10– Exclude students with disabilities (eligible for other

voucher program, McKay Scholarships)

• 9.8M student-year observations; 2.8M students• Private school universe from Florida Dept of Education– Public and private addresses geocoded using ARCGis– Private competitors measured by grade span served

Empirical approach

• School and time fixed effect models (clustered SE)• Dependent variable: standardized student DSS test

scores, controlling for prior-year test scores when available

• Controls for student characteristics and grade• Policy variable: private school competition (measured

in 2000) x post-policy• “Post-policy” occurs once program is announced• Other models look year-by-year after policy is

announced

Competition measures

• Physical distance in miles to nearest private school competitor (measured negative)

• Number of private competitors within 5 miles• Number of types of private competitors within 5 miles

– Types (self-identified by schools): non-religious; non-denominational; Catholic; Protestant; Evangelical; Baptist; Islamic; Jewish; “Christian”; other religious

• Herfindahl index of competitor types (1-Herfindahl)• Robust to other radii of competition• Study sample: schools with competitor within 5 miles

(basically the whole state)

Competition measures #1

Competition measures #2

Competition measures #3

Competition measures #4

Within-MSA variation

Within-MSA variation

Within-MSA variation

First-year estimates of voucher effects

Competition measure Math estimated effect Reading estimated effect

Distance 0.017***(0.002)

0.015***(0.002)

Density 0.003***(0.000)

0.003***(0.000)

Diversity 0.011***(0.001)

0.011***(0.001)

Concentration 0.069***(0.008)

0.070***(0.007)

Adding leads of policy variableCompetition measure

Math: first year

Math: lead Reading: first year

Reading: lead

Distance 0.012***(0.003)

-0.006+(0.003)

0.012***(0.002)

-0.004+(0.002)

Density 0.002***(0.000)

-0.001***(0.000)

0.002***(0.000)

-0.000(0.000)

Diversity 0.006***(0.002)

-0.007***(0.002)

0.009***(0.001)

-0.003**(0.001)

Concentration 0.045**(0.015)

-0.033*(0.015)

0.045***(0.012)

-0.034**(0.012)

Differences by program eligibilityCompetition measure

Math: ineligibles

Math: difference for eligibles

Reading: ineligibles

Reading: difference for eligibles

Distance 0.014***(0.002)

0.008**(0.003)

0.012***(0.002)

0.010***(0.003)

Density 0.003***(0.000)

-0.001*(0.000)

0.003***(0.000)

-0.001**(0.000)

Diversity 0.012***(0.001)

-0.002*(0.001)

0.013***(0.001)

-0.003**(0.001)

Concentration 0.060***(0.009)

0.022*(0.011)

0.060***(0.008)

0.030**(0.010)

Effects same for poor vs very poorCompetition measure

Math: reduced price lunch

Math: difference for free lunch

Reading: reduced price lunch

Reading: difference for free lunch

Distance 0.023***(0.003)

-0.002(0.003)

0.019***(0.003)

0.001(0.003)

Density 0.003***(0.000)

0.000(0.000)

0.003***(0.000)

-0.000(0.000)

Diversity 0.010***(0.001)

0.001(0.001)

0.012***(0.001)

0.000(0.001)

Concentration 0.088***(0.009)

-0.012(0.010)

0.083***(0.008)

-0.004(0.011)

Differences by context (reading; distance measure of competition)

Contextual measure

Average class size in school

2000 school grade District has open enrollment

Competition x post-policy

0.032***(0.001)

0.016***(0.003)

0.008***(0.002)

Interaction with class size

-0.001(0.000)

Interaction with "B" grade

0.005(0.006)

Interaction with "C" grade

-0.003(0.004)

Interaction with "D" grade

0.017(0.011)

Interaction with "F" grade

0.222**(0.072)

Interaction with open enrollment

0.014***(0.004)

Over-time changes in policy effectsComp.measure (pre-policy)

Lead of program(2000-01)

First year(2001-02)

2002-03 2003-04 2004-05 2005-06 2006-07

Distance -0.008+(0.005)

0.010*(0.004)

0.008+(0.004)

0.014***(0.004)

0.023***(0.004)

0.028***(0.004)

0.023***(0.004)

Density -0.002***(0.000)

0.002***(0.000)

0.001***(0.000)

0.002***(0.000)

0.004***(0.000)

0.004***(0.000)

0.004***(0.000)

Diversity -0.008***(0.002)

0.004*(0.002)

0.003(0.002)

0.008***(0.002)

0.013***(0.002)

0.018***(0.002)

0.016***(0.002)

Concen-tration

-0.040+(0.021)

0.036+(0.019)

0.026(0.018)

0.063***(0.018)

0.104***(0.019)

0.131***(0.019)

0.116***(0.019)

Bigger differences in “mobility” years

• Competition effect?• Resource effect?• Composition effect?

Evidence of negative selection

Evidence of negative selection

Where do students fall in their prior school’s distribution?

Where do students fall in their prior school’s distribution?

Distributions by race/ethnicity

Distributions by race/ethnicity

Summing up

• Preliminary conclusions• Limitations/generalizability