Tiebout Forces, Public School Competition and Educational Quality

Abstract

This paper re-evaluates the effect of US public school competition on children's educational achievement based on a large longitudinal school profile composed from the Common Core of Data (CCD at NCES). To reconcile the endogenous shift of local competition measures driven by demand side sorting of households among school districts, I examine the changes of these measures within a local education market over a prolonged period of time and sort out the areas that are most affected by Tiebout forces and the areas least affected by these forces. I find that the maginal effect of school choices on student achievement based on a value-added specification is significant and postive at 3.244 when demand side shifts are controlled using this method. The IV estimations at the second part of this paper reinforces this estimation result.