This paper uses a structural
model of school choice and academic achievement to study the demand for charter
schools in Boston, Massachusetts, with an emphasis on comparative advantage in
school choice. It combines an optimal portfolio choice model of charter school
application and attendance decisions with a selection correction approach that
links students' school choices to the achievement gains generated by charter
attendance.
To estimate the model, the author uses instrumental variables derived
from randomized entrance lotteries, together with a second set of instruments
based on distance to charter schools. The estimates show that charter
schools reduce achievement gaps between high- and low-achieving groups, so disadvantaged
students and low-achievers have a comparative advantage in the charter sector.
Higher-income students and students with
high prior achievement have the strongest demand for charter schools, however,
which implies that preferences for charters are inversely related to potential
achievement gains. The structural estimates show a similar pattern of
selection on unobservables. These findings imply that students do not
sort into charter schools on the basis of comparative advantage in academic
achievement; instead, disadvantaged students are less likely to apply to
charter schools despite larger potential achievement gains.
The study uses simulations of an equilibrium school choice model to quantify the consequences
of this demand-side pattern for the effects of charter school expansion.
The results suggest that in the absence of significant behavioral or institutional
changes, the effects of charter expansion may be limited as much by demand as
by supply.
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