Description
- Abstract:
- Friedman (1955) argued that giving parents freedom to choose schools would improve education. His argument was simple and compelling because it extended results from markets for consumer goods to education. We review the evidence, which yields surprisingly mixed results on Friedman's prediction. A key reason is that households often seem to choose schools based on their absolute achievement rather than their value added. We show this can be rational in a model based on three ingredients economists have highlighted since Friedman worked on the issue. First, education is an investment into human capital (Becker, 1964). Second, labor markets can feature wage premia: individuals of a given skill level may receive higher wages if they match to more productive firms (Card et al., 2018). Third, distance influences school choice and the placements schools produce (Abdulkadiroglu et al., 2017, Weinstein, 2017). These imply that choice alone is too crude a mechanism to ensure the effective provision of schooling.
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Citation
W. Bentley MacLeod, and Miguel Urquiola,
"Is Education Consumption or Investment? Implications for School Competition"
(2019).
EdWorkingPapers.com Archive.
Brown Digital Repository. Brown University Library.
https://repository.library.brown.edu/studio/item/bdr:956668/
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EdWorkingPapers.com Archive
The Annenberg Institute at Brown University has developed this national working paper series to provide public access to high-quality papers from multiple disciplines on a wide variety of topics related to education. EdWorkingPapers focuses particularly on research with strong implications …...