Abstract
This article uses the Tiebout hypothesis to explain variations in private school enrollments across metropolitan statistical areas (MSAs). Each MSA is viewed as an educational marketplace where families sort themselves into school districts. The typical district is expected to be more heterogeneous in MSAs that have fewer districts and thus have less complete sorting. As district heterogeneity rises, dissatisfaction with the quality of education chosen by the median voter grows and private enrollment increases. The variation of income in each school district, school expenditures, and private school enrollment are mutually determined in a three-equation system. The model is estimated for 129 MSAs, using 1980 data at the school district level. The results are generally supportive of the theory. Secular private enrollments are positively related to income heterogeneity. State policies that reduce choice among public school districts within MSAs result in greater secular private school enrollment. Finally, revenue increase limitations also increase private enrollments.
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