This paper develops a new economic model of public school choice. The key innovation is to model competition between schools in an environment in which parents have peer preferences. The analysis yields three main findings. First, peer preferences dampen schools' incentives to exert effort in response to competitive pressure. Second, when peer preferences are sufficiently strong, choice can reduce social welfare. This is because choice is costly to exercise but aggregate peer quality is fixed. Third, given strong peer preferences, choice can reduce school quality in more affluent neighborhoods. We conclude that peer preferences weaken the case for choice.
Barseghyan, Levon, Damon Clark, and Stephen Coate.
"Peer Preferences, School Competition, and the Effects of Public School Choice."
American Economic Journal: Economic Policy,
State and Local Government; Intergovernmental Relations: Interjurisdictional Differentials and Their Effects
State and Local Government: Health; Education; Welfare; Public Pensions
Analysis of Education
Education: Government Policy
Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics