School choice can exacerbate inequality

Many observers have argued that giving parents freedom to choose schools would improve education (Friedman, 1955). This study reviews the evidence, and finds little indication that households systematically prefer higher value added schools.

The study shows that this can be explained using a competitive labor market model that takes into account both student and employer choice. The setup implies that households will often rationally prefer schools with high absolute achievement rather than high value added.

As a result, school choice can exacerbate inequality without improving opportunities for the most disadvantaged students.