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Does Competition among Public Schools Benefit Students and Taxpayers?

Caroline M. Hoxby
The American Economic Review
Vol. 90, No. 5 (Dec., 2000), pp. 1209-1238
Stable URL: http://www.jstor.org/stable/2677848
Page Count: 30
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Does Competition among Public Schools Benefit Students and Taxpayers?
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Abstract

Tiebout choice among districts is the most powerful market force in American public education. Naive estimates of its effects are biased by endogenous district formation. I derive instruments from the natural boundaries in a metropolitan area. My results suggest that metropolitan areas with greater Tiebout choice have more productive public schools and less private schooling. Little of the effect of Tiebout choice works through its effect on household sorting. This finding may be explained by another finding: students are equally segregated by school in metropolitan areas with greater and lesser degrees of Tiebout choice among districts.

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