Choice, competition and switching cost in education
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Date
2015
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Abstract
The benefits of competition are recognized and promoted in most industries, however they are not evident and have been questioned in the Education sector. The difficulty to measure competition, the idea that parents don't rationally choose schools for their children and that schools do not react to that choice is in the center of the debate. We critically analyze the prevailing methodology in the literature that relates competition and educational performance and the data used to estimate that impact. We propose a methodology that considers relevant substitutes for each school while simultaneously using various attributes that parents consider when choosing school, and we apply this methodology to evaluate the effects of competition on academic performance in Chile. The evidence supports the hypothesis that competition has a positive, significant and relevant educational impact on private and public schools.
A main obstacle a voucher system has to produce effect in the short run is the existence of cost of moving a child is already in a given school. In fact, the voucher effect in the short run not only depend on parents\2019 ability to choose the best school for their children, but on their capacity to switch. The factor that can decrease this capacity is the existence of switching costs, caused by different factors such as stress experienced by the children, and the loss of social networks. We developed a methodology that quantifies switching cost. We then analyze the existence of these costs in Chile. By using flexible evaluation techniques, which consider the existence of structural changes in the possibility of switching schools, we found that the switching costs are statistically significant and economically relevant.
A main obstacle a voucher system has to produce effect in the short run is the existence of cost of moving a child is already in a given school. In fact, the voucher effect in the short run not only depend on parents\2019 ability to choose the best school for their children, but on their capacity to switch. The factor that can decrease this capacity is the existence of switching costs, caused by different factors such as stress experienced by the children, and the loss of social networks. We developed a methodology that quantifies switching cost. We then analyze the existence of these costs in Chile. By using flexible evaluation techniques, which consider the existence of structural changes in the possibility of switching schools, we found that the switching costs are statistically significant and economically relevant.
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Tesis (Doctor in Engineering Sciences)--Pontificia Universidad Católica de Chile, 2015