American Monetary Association
Competition between Exclusive and Open public Schools, Vouchers, and Peer-Group Effects Author(s): Dennis Epple and Rich E. Romano
Source: The American Monetary Review, Volume. 88, Number 1 (Mar., 1998), pp. 33-62 Posted by: American Economic Association
Stable WEB LINK: http://www.jstor.org/stable/116817.
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CompetitionBetween Privateand General public Schools,
Discount vouchers, and Peer-GroupEffects
By DENNIS EPPLE AND RICHARD Electronic. ROMANO*
A theoretical and computational unit with tax-financed, tuition-free community schools and competitive, tuition-financedprivate schools can be developed. Pupils differ by simply ability and income. Accomplishment depends on individual ability and on peers' talents. Equilibrium contains a strict hierarchy of school qualities and twodimensional student sorting with couchette by capability and profits. In exclusive schools, high-ability, low-income learners receive college tuition discounts, although lowability, high-income students spend tuition premia. Tuition discount vouchers increase the comparable size of the private sector and the extent of scholar sorting, and benefit high-ability students in accordance with low-ability college students. (JEL H42, 128) Unhappiness in the United States with all the primary and secondary educational system is among the most norm. The decline in SAT scores
in the 70's, embarrassinginternationalcomparisons of student success, slow development in efficiency measures, and increasing variation in revenue all call up into problem the quality of the educational system. ' Education
policy figured plainly in recenit presidential elections. The controversy has dedicated to issues of school choice, which includes voucher devices (Karen De Witt, 1992). Typical coupon proposals provide students participating in private
colleges a tax-financed, school-redeemable
coupon of set amount toward (or perhaps
covering) expenses. Although a 1993 A bunch of states
referendumfor vouchers was defeated, policy
modify at express and local amounts abounds, as
does difference in the private educational sector.
The state of Minnesota and university districts in
30 claims allow occupants to choose the open public
school their children attend. 2The city of Milwaukee, wisconsin introduced a voucher system in the 1989-1990 school 12 months. A -number f private
institution and private-public school endeavours
are developing (see e. g., John F. Witte et 's.,
1993; Dorrie Forbes, year 1994; Steven Glazerman
and RobertH. Meyer, 1994; Joe Nathan, 1994;
Newsweek, 1994; Wsj, 1994;
Steven Baker, 1995; Jay S. Green ou al.,
1996). Educational reform emphasizing improved school competition with an increased
* Epple: GraduateSchool of IndustrialAdministration,
Carnegie Mellon University or college,...
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