Abstract
To improve the quality of education, one can either directly reward performance or introduce school choice, private provision, and demand subsidies. The Chilean voucher scheme combines both approaches: an attendance-related subsidy favors school choice and creates incentives for schools to promote attendance throughout the year. With imperfect monitoring, however, institutions may respond by manipulating performance indicators. By analyzing audit data, we find evidence that a large fraction of Chilean schools – including public schools – over-report attendance, with a higher prevalence among for-profit and under-achieving institutions. Expenditure data suggest that manipulation among for-profit schools seems to follow rent extraction purposes rather than educational goals.
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