Abstract

This study analyzes the effect of spatial competition on public schools' efficiency in Chile, an extreme case of market-oriented reforms in the educational sector. To address this issue, we use a measure of competition that captures three major characteristics of market competition in a spatial context: the number of competitors, based on distance buffers; the size of competitors, measured by the enrollment of voucher schools; and the geographical distance among public schools and their competitors. To control for the potential endogeneity of our measure of spatial competition on public schools' efficiency, we use an instrumental variable based on the discontinuites generated by admissions municipality boundaries . We do not find evidence that public schools' efficiency increases or decreases as the result of the increment of voucher schools located near to public schools, an increase in the enrollment of existing voucher schools, or both factors simultaneously. This result is robust to: (1) the limit of education market or other measures of spatial competition; (2) the methodology used to compute the efficiency measures; and (3) whether we explain efficiency or educational performance.