Targeted school voucher policies do not effectively help students from the lowest-socioeconomic status (SES) households obtain high-quality education.

This is the conclusion of new research by Benjamin Feigenberg, Rui Yan and Steven Rivkin, published in the October 2019 issue of The Economic Journal, which studies school voucher reforms in Chile and their impact on low-SES achievement in education.

Chile implemented a major reform in 2008 that was designed to improve disadvantaged students' access to high-quality schooling by providing greater choice and additional resources. Chile is a country with a long-standing school voucher program, where roughly half of all children attend private school.

The Subvención Escolar Preferencial (SEP) raised the value of school vouchers used to fund private and public schools by 50% for students from the lowest-socioeconomic status (SES) households. In order to receive these additional revenues, both public and private voucher schools were required to eliminate background screening of SEP-eligible students and were prohibited from charging them additional tuition or fees. The paper’s authors investigated the impact of SEP on the achievement deficit of low-SES students, the relative gains of all students in schools that participated in the SEP program, and the contributions of specific channels to observed changes.

The authors’ analysis of SEP’s effect on the achievement gap begins with a simple year-on-year comparison of low- and high-SES students' fourth grade test scores before and after the SEP reform and identifies a greater than 0.2 standard deviation improvement in the relative performance of low-SES students in the period after SEP was introduced.

The body of evidence, however, provides little support for the belief that the SEP reform led to a large reduction in the achievement gap or substantial achievement gains in participating schools. Rather, the improvements for low-SES students attributable to the SEP program appear to be largely illusory.

The authors find that most of the test score convergence is attributable to a combination of selective test taking and decreasing inequality in the maternal education distribution for all children. The same changes in the distribution of family background characteristics also appear to explain most of the measured decline in the achievement differential between students in SEP-participating and non-participating schools.

In complementary analyses, the authors examined those mechanisms that would be expected to contribute to measured test score convergence. Despite the 50% increase in the voucher value for disadvantaged students at participating schools, there is little evidence of changes in class size or teacher quality that would be expected to improve student performance.

An audit showed that many schools were not using the additional revenues for permitted expenditures and estimates that exploit variation in the revenues allocated to schools show little or no evidence of a positive effect of allocated funds on achievement growth. In addition, the authors found limited evidence that disadvantaged students transitioned to higher quality schools (that were now available to them at no cost) during the period of large achievement gains for low-SES students.

Finally, while higher voucher revenues may theoretically provide schools an incentive to become more attractive to low-income families, there is little direct evidence of such a competitive or incentive effect on school quality.

The findings indicate that the Chilean SEP policy was not nearly as promising as it initially appeared and that additional evidence is needed on the question of whether targeted voucher policies can effectively serve those students most in need.

How, and to what extent, the price mechanism can help mitigate the adverse effects of Chile’s educational markets remains an open question – one that is of immense importance to educational policymakers seeking policies that raise the quality of education for disadvantaged children, including those that strengthen the positive forces of competition.

Illusory Gains from Chile's Targeted School Voucher Experiment by Benjamin Feigenberg, Rui Yan and Steven Rivkin is published in the October 2019 issue of The Economic Journal

Benjamin Feigenberg

Assistant Professor of Economics at The University of Illinois at Chicago

Steven Rivkin

Professor of Economics at University of Illinois at Chicago

Rui Yan

Data Scientist at Capital One