For‐profit versus not‐for‐profit charter schools: an examination of Michigan student test scores

Abstract

The role of for‐profit educational organizations in the predominantly public and not‐for‐profit K–12 US schooling system is being fiercely debated across our nation. Little empirical research is available to help policy‐makers develop informed decisions regarding the educational value that for‐profit schools provide to our students. This paper fills in part, for the first time in detail, this void. This paper uses a four‐year panel of charter schools from the state of Michigan to estimate a school‐level education production function and employ a random effects model that controls for student and district characteristics. The results find no evidence of a change in efficiency when a charter school is run by a for‐profit company (versus a not‐for‐profit company). The analysis developed in this paper takes the debate one step further as well, and examines the role that the size of for‐profit firms plays in the associated outcomes. There is some evidence that small for‐profit companies are either less efficient or enroll a different type of cohort of students than not‐for‐profit schools.