Targeted or Universal? Mobilizing Students Through School Vouchers

This paper studies how students and schools respond to school voucher policies, in a context in which both a universal and a targeted vouchers are used to subsidize enrollment. In particular, I investigate whether an increase... [ view full abstract ]

This paper studies how students and schools respond to school voucher policies, in a context in which both a universal and a targeted vouchers are used to subsidize enrollment. In particular, I investigate whether an increase in the universal voucher is more/less effective in increasing students’ access to schools than an (equivalently costly) increase in the targeted voucher. To that aim, I develop and estimate a structural model of demand and supply of schools for Chile’s elementary education, that accounts for both schools’ decision to join the targeted voucher program and schools’ tuition setting. I find that both policies are similarly ineffective in mobilizing students. However, schools do respond to the policies. Specifically, an increase in the universal voucher induces all schools to lower their tuition; whereas an increase in the targeted voucher attracts more high-quality schools to join the targeted voucher program, thereby increasing the set of high-quality schools that predominantly serve disadvantaged students. I also find that the majority of (the few) students that switch schools under both policies, switch to schools of higher quality. Finally, families’ spending decreases under the universal voucher policy, which is a direct consequence of all schools lowering their tuition.