27/7/17: Designing a More Equitable System of School Access

In the decades old battle for the future minds, U.S. Republicans and Democrats have been constantly at odds when it comes to how one achieves, simultaneously, higher quality of education and more equitable access to education for those from less well-off families. In the mean time, one country - Chile - has been building up a system of vouchers that, after 36 years worth of experimentations, is delivering on both.

In 2008, Chile introduced a massive reform of its 27-years-old system of education vouchers by passing the Preferential School Subsidy Law (SEP). The system of education funding in Chile is based on universal school voucher payments, but until 2008, the system did not target explicitly those on lower incomes. Then, SEP changed this set up by hiking the value of the voucher by 50 percent for a large category of so-called “Priority students”, a category that primarily covers students “whose family incomes fell within the bottom 40 percent of the national distribution”.

A recent NBER study looked at the results (see full citation and link below).

Specifically, SEP reform stipulated that “to be eligible to accept the higher-valued vouchers from these students, schools were required to waive fees for Priority students and to participate in an accountability system.”

The study used data on math scores attained by “1,631,841 Chilean 4th-grade students who attended one of 8,588 schools during the year 2005 through 2012” and asked the following two questions:

• “Did student test scores increase and income-based score gaps become smaller during the five years after the passage of SEP?” and
• “Did SEP contribute to increases in student test scores and, if so, through what mechanisms?”

The study found that:

1. “On average, student test scores increased markedly and income-based gaps in those scores declined by one-third in the five years after the passage of SEP.” So the effects were in desired direction for all students (improving outcomes) and stronger effect for targeted students (the Priority Students). Better result for all, more equitable result for those in most need.
2. “The combination of increased support of schools and accountability was the critical mechanism through which the implementation of SEP increased student scores, especially in schools serving high concentrations of low-income students.” So poor performance of less well-off schools improved more than the performance of better-off schools. Again, better result for all, more equitable result for those in most need.
3. Another important aspect of the study was to identify whether the new vouchers triggered a massive redistribution of better-performing poorer students away from less well-off school. In other words, whether the scheme reform benefited predominantly more those students from the less privileged background who would have gained otherwise. The authors found that “migration of low-income students from public schools to private voucher schools played a small role.”

So you can design a market-based solution for education system funding that does preserve schools choice, enhances educational outcomes for all, and reduces educational inequality.

Full citation: Murnane, Richard J. and Waldman, Marcus and Willett, John B. and Bos, Maria Soledad and Vegas, Emiliana, The Consequences of Educational Voucher Reform in Chile (June 2017). NBER Working Paper No. w23550. Available at SSRN: https://ssrn.com/abstract=2996306