Abstract
Many urban school districts in the United States and OECD countries confront the necessity of closing schools due to declining enrollments. To address this important policy question, we formulate a sequential game where a superintendent is tasked with closing down a certain percentage of student capacity; parents respond to these school closings by sorting into the remaining schools. We estimate parents' preferences for each school in their choice set using 4 years of student-level data from a mid-sized district with declining enrollments. We show that consideration of student sorting is vital to the assessment of any school closing policy. We next consider a superintendent tasked with closing excess school capacity, recognizing that students will sort into the remaining schools. Some students will inevitably respond to school closings by exiting the public school system; it is especially difficult to retain higher achieving students when closing public schools. We find that superintendents confront a difficult dilemma: pursuing an equity objective, such as limiting demographic stratification across schools, results in the exit of many more students than are lost by an objective explicitly based on student retention.
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