Mobility, targeting and private school vouchers

Abstract

This paper uses general equilibrium simulations to explore the role ofresidential mobility in shaping the impact of different types of private school voucher policies. In particular, general vouchers available to all residents in the state are compared to vouchers specifically targeted to either underprivileged school districts or underprivileged households. The simulations are derived from a three-community mo deI of low, middle and high income school districts (calibrated to New York data), where each school district is composed of multiple types of neighborhoods that may vary in house quality as well as the leveI of neighborhood extemalities. Households that differ in both their income and in the ability leveI of their children choose between school districts, between neighborhoods within their school district, and between the local public school or a menu of private school altematives.Local public school quality within a district is endogenously determined bya combination of the average peer quality of public school attending children as well as local property and state income tax supported spending. Financial support (above a required state minimum) is set by local majority rule. Finally, there exists the potential for a private school market composed of competitive schools that face production technologies similar to those ofpublic schools but who set tuition and admissions policies to maximize profits. In tbis model, it is demonstrated that school district targeted vouchers are similar in their impact to non-targeted vouchers but vastIy different from vouchers targeted to low income households. Furthermore, strong migration effects are shown to significantly improve the likely equity consequences of voucher programs.