An Analysis of School Size Under a Voucher System

Abstract

Educational vouchers and other mechanisms of choice in schooling have received considerable attention in recent years. Indeed, interest in educational vouchers and choice tends to increase periodically as the educational system begins to confront new challenges or changes in the political or economic environment. Vouchers became an issue of importance in the late 1960's and early 1970's in response to increasing demands for accountability and equity in the provision of educational services, and vouchers have again come to the fore, seemingly as part of the tax revolt movement which is demanding greater effectiveness out of government dollars and an increasing voice by the citizenry on how those dollars are spent. There have been numerous specific proposals from such writers as Friedman (1962), Jencks (see Education Vouchers, 1970), and Coons and Sugarman (1978). All of the plans follow the same basic structure. The state provides a voucher for each child which can be exchanged for educational services at any school that is approved by the state. Some of the aspects that differentiate the various proposals include the range of schools eligible to receive the vouchers, the value of the voucher to be given to each child, the restrictions placed on the tuition charges by schools (i.e., whether or not schools would be required to accept the voucher in full payment of tuition), and various legal restrictions with respect to admission standards. One of the primary objectives of a voucher scheme is to promote greater educational choice and thereby to induce greater responsiveness on the part of school decision makers to the desires of families with school-age children. The greater the number of schools operating in a particular geographic area, the greater the opportunity families will have in finding a school to their liking. Furthermore, the greater the number of schools there are, the more intense the competition is likely to be and, based on the economic theory of the firm, the greater the likelihood that schools will be more efficient in satisfying the demands of parents for educational services (see Nutter & Moore,