Does Competition Among Public Schools Benefit Students and Taxpayers?

2000/12/01 by Caroline Hoxby · 1,108 citations
Economics, Econometrics and Finance · Social Sciences · #Fiscal Policy and Economic Growth #Local Government Finance and Decentralization #Housing Market and Economics #Tiebout model #Metropolitan area #Economics #Competition (biology) #Sorting #School choice #Public good #Public education #Public economics #Demographic economics #Labour economics #Microeconomics #Economic growth #Geography #Biology #Ecology

paper · doi:10.1257/aer.90.5.1209

published in American Economic Review 90(5), 1209-1238 (American Economic Association)

openalex publication_date 2000/12/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/15

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. (JEL H70, I20)

Citations

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