Abstract

School choice is one of the most widely debated policies aimed at increasing student welfare in different countries. Proponents argue that school choice may create incentives for schools to increase productivity, offer a product closer to student demands, and expand the choice set for poor students. Opponents, in contrast, argue that school choice may increase segregation, decrease school quality for poor students by moving good peers to other schools, and produce competition in irrelevant school attributes if parents do not care about education outcomes. Most researchers use reduced-form methods to study these claims. For instance, some papers analyze the effect of interschool competition on test scores and other measures, finding mixed evidence. 1 Other papers use a variety of methods to study the process of choice by parents. This paper uses semi-structural estimates of parents’ preferences from an earlier work to study the effects of school choice on both student welfare and socioeconomic segregation. 2 To the best of our knowledge, this is the first time school choice has been evaluated using this kind of approach, in which preferences are explicitly taken into account.