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American Economic Review: Vol. 90 No. 5 (December 2000)

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Does Competition among Public Schools Benefit Students and Taxpayers?

Article Citation

Hoxby, Caroline M. 2000. "Does Competition among Public Schools Benefit Students and Taxpayers?" American Economic Review, 90(5): 1209-1238.

DOI: 10.1257/aer.90.5.1209

Abstract

Tiebout choice among districts is the most powerful market force in American public education. Naive estimates of its effects are biased by endogenous district formation. I derive instruments from the natural boundaries in a metropolitan area. My results suggest that metropolitan areas with greater Tiebout choice have more productive public schools and less private schooling. Little of the effect of Tiebout choice works through its effect on household sorting. This finding may be explained by another finding: students are equally segregated by school in metropolitan areas with greater and lesser degrees of Tiebout choice among districts.

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Authors

Hoxby, Caroline M. (Harvard U)

JEL Classifications

I21: Analysis of Education
H73: State and Local Government; Intergovernmental Relations: Interjurisdictional Differentials and Their Effects
L33: Comparison of Public and Private Enterprises; Privatization; Contracting Out


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