Private Schools and Public School Achievement.

ABSTRACT

The effects of private schools on public elementary and secondary school achievement in Illinois are estimated. The percentage of students in private schools in a school district is treated as an endogenous variable in the achievement equation. Catholic religion is used to identify a two-stage model. It is shown that private schools have no direct effect on public school achievement.

I. Introduction

One argument for education vouchers and more private school choice is that more competition from private schools will increase the quality of public education (Friedman 1962; Friedman and Friedman 1981). Recently, New York City's Mayor Giuliani argued that a private school voucher program in New York City was increasing the quality of public education. His reasoning was that vouchers increased competition between public and private schools (Hartocollis 1997). Similarly, in Chicago there is a recognition that Catholic schools might benefit public schools. For this reason, this past year the head of the public school system in Chicago sent out teams to interview Catholic school principals to learn how to improve public school achievement (The Economist 1998). Apart from recent studies by Hoxby (1994) and Dee (1998) that show that private schools raise the quality of public education, there is very little empirical evidence on this topic. Related studies by Borland and Howsen (1992) and Grosskopf et al. (1998) show that more competition in the public school sector increases the quality of public education.

Although it is possible that a larger private primary and secondary school sector would increase the quality of public education through competitive pressures, it is also possible that there would be no effect (or a negative effect). Although there is controversy on how much resources matter in education (see Hanushek 1986 and 1996; Card and Kruger 1992a, 1992b, 1996), it is possible that a larger primary and secondary school sector could affect resources for public schools through changes in local political support. It is also possible that a larger private sector could result in increasing per pupil expenditures in the public sector by reducing the tax-price of public schooling (see Poterba 1997). This might result in higher expenditures in public schools.

Further, if private schools take the best public school students, this could reduce public school achievement both directly through reducing the number of high achieving students in public schools and indirectly through negative peer group effects. That is, if the best students leave public schools this could reduce performance by the remaining students if the ability of students who remain in the public sector is positively related to peer ability. In a recent theoretical paper, Epple and Romano (1998) examine some of the possible interrelationships between private schools and public schools.

Most of the literature on private schools has focused on whether they affect student achievement. Several recent studies on Catholic schools that try to correct for selectivity suggest that there is a positive Catholic school effect on student achievement--particularly in big cities where the quality of public education is low (Evans and Schwab 1995; Neal 1997; Sander 1996; Sander and Krautmann 1995). It is less clear if there is a Catholic school effect in areas where the quality of public education is relatively high. There is less evidence on the effects of other types of private schools on academic achievement.