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A NOTE ON THE IMPACT OF VOUCHER PROGRAMS WHEN THERE ARE NONLINEAR PEER GROUP EFFECTS

Published online by Cambridge University Press:  31 March 2006

HUNG-JU CHEN
HUNG-JU CHEN
Affiliation:
National Taiwan University
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Abstract

This study constructs a dynamic model of the coexistence of public and private schools to study the impact of voucher programs when there are nonlinear peer group effects. The government provides public schools as well as tuition vouchers for households attending private schools. School quality depends on expenditure per student and peer quality within the school. When peer quality is nonlinear, more agents will choose public schools if peer quality is more substitutable, whereas more agents will attend private schools if peer quality is more complementary. We find that vouchers will typically create a “cream skimming” effect and the impact of voucher programs on economic performance is sensitive to the way in which peer interactions affect school quality.

Keywords

GrowthIncome InequalityVoucher ProgramsPeer Group Effects
Type
NOTES
Information
Macroeconomic Dynamics , Volume 10 , Issue 5 , November 2006 , pp. 685 - 698
Copyright
© 2006 Cambridge University Press

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