The threat of competition and public school performance: Evidence from Poland

Paweł Bukowski,Martyna Kobus

doi:10.1016/j.econedurev.2018.09.004

Abstract

Theoretical literature on whether school competition raises public school productivity is ambiguous (e.g. MacLeod & Urquiola, 2015) and empirical evidence is mixed (e.g. Hsieh and Urquiola, 2006). Moreover, competition might itself be an outcome of changes in productivity (e.g. Hoxby, 2003). We provide evidence for the negative effect of the threat of competition on students’ test scores in elementary public schools in Poland. The identification strategy uses the introduction of the amendment facilitating the creation of autonomous schools in Poland in 2009 as an external shock to the threat of competition. We focus on the short run in which there is only a limited set of actions available to schools’ principals. For the total sample we find no effect, however, for more competitive urban educational markets, we report a drop in test scores in public schools following the increased threat of competition. This negative effect is robust to the existence of autonomous schools prior to the amendment and to the size of public schools. It does not result from a pre-existing or concurrent trend either. We exclude student sorting and adjustments in schools’ expenditures as potential channels.

Highlights

Disconnection between educational expenditures and student achievement (Mayer & Peterson, 1999), as well as between standard measures of school quality and student achievement (Hanushek, 2003) has turned economists’ attention to the incentive structure of public schools (Betts, 1995; Hoxby, 2003)
In this paper we extend the empirical literature by providing evidence on the negative effect of the threat of competition from community schools on public school performance in Poland
We test the parallel trend assumption in three different ways and in each test we find that the estimated negative effect of the threat of competition is not driven by the differential pretreatment trends in outcome

Summary

Introduction

Disconnection between educational expenditures and student achievement (Mayer & Peterson, 1999), as well as between standard measures of school quality and student achievement (Hanushek, 2003) has turned economists’ attention to the incentive structure of public schools (Betts, 1995; Hoxby, 2003). There is a substantial disagreement in the literature on how market-like incentives can impact on public school performance. For those who argue that following increased competition public schools should improve their quality (Hoxby, 2003), the basic argument is that more productive schools would drive students away from their current school. This process would continue until higher-quality schools dominate the whole educational market or lower-quality schools respond to competitive pressure. The theoretical literature does not provide a clear sign for the productivity changes in public schools due to increased competition

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Conclusion