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How do Vouchers Work? Evidence from Colombia. 7 June 2007 World Bank. Eric Bettinger, Case Western U Michael Kremer, Harvard Juan Saavedra, Harvard. Educational Vouchers. Controversial and Often Debated Educational Reform Large-Scale Voucher Programs Chile & Colombia

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How do vouchers work evidence from colombia

How do Vouchers Work?Evidence from Colombia

7 June 2007World Bank

Eric Bettinger, Case Western U

Michael Kremer, Harvard

Juan Saavedra, Harvard

Educational vouchers
Educational Vouchers

  • Controversial and Often Debated Educational Reform

  • Large-Scale Voucher Programs

    • Chile & Colombia

    • US Sites (Milwaukee, Cleveland, Florida, Ohio)

    • Other Voucher-Like Programs

      • Private Programs in US

      • Regulated Voucher Programs Internationally (e.g. Sweden, Japan, The Netherlands)

  • Motivation for Programs Differ Substantially Across Sites

    • Competition and Opportunity

    • Overcrowding

Evidence on educational vouchers
Evidence on Educational Vouchers

  • International Evidence

    • Colombia

    • Chile

  • US Evidence

    • New York City Scholarship Program

    • Milwaukee Voucher Program

    • Other Private/Public Programs

Welfare implications of vouchers
Welfare Implications of Vouchers

  • Costs/Benefits to Students Directly Receiving the Voucher

    • Cost of Voucher

    • Change in Educational Outcomes

  • Costs/Benefits to Students not Receiving the Voucher

    • Change in Peers

    • Competition

    • Change in Resources

Peer effects and vouchers
Peer Effects and Vouchers

  • Hsieh and Urquiola (2006)

    • Chilean Voucher Program

    • Key Finding was that Aggregate Outcomes Did Not Change

    • Voucher Recipients Experienced a Positive Peer Effect

    • Other “Left Behind” Students Experienced a Negative Effect

  • Epple and Romano (1998)

    • Model of Educational Vouchers

    • Peer Effects Need Not Be Zero Sum but Some Students are Worse Off

Other peer effect literature
Other Peer Effect Literature

  • Sacerdote (2001)

  • Duncan, Boisjoly, Kremer, Levy and Eccles (2005)

  • Zimmerman (2003)

Simple model with peer effects
Simple Model with Peer Effects

  • Consider the Following Educational Production Function

  • Yi = Educational Outcome Student i

  • Xi = Socioeconomic Characteristics of Student i

  • = Average Characteristic of School

  • P = Program Participation

Model cont
Model (cont.)

  • Positive Voucher Effects but No Peer Effects

    β1=0, β2>0

  • Positive Voucher Effects are Solely Peer Effects

    β1>0, β2=0

Voucher comparisons
Voucher Comparisons

  • Because of Randomization, Difference in Average Outcome of Voucher Lottery Winners and Losers Measures the Effect:

  • Reported Effects in Angrist et. al. (2002, 2006)

Social effects
Social Effects

  • Depends on Values of β1 and β2

  • If β1=0, β2>0, then social effect is β2

  • If β1>0, β2=0, then no social effect in simple linear-in-means peer effect model

How does one untangle peer and voucher effects
How does One Untangle Peer and Voucher Effects?

  • Ideal Experiment:

    • Randomly Assign Voucher Students to Group with “Worse” Peers

    • Measure Whether Voucher Effect is Present When Peer Effect is Bad

    • If Voucher Effects are from Peer Effects, then Voucher Effects Should Disappear or Even Be Negative

  • Colombia PACES Program May Have Such an Experiment

Colombia s paces program
Colombia’s PACES Program

  • Objectives

    • Increase secondary school enrollment for poor

  • Rules

    • Student must be entering 6th grade and under 15 years old

    • Students must provide evidence that they live in poor neighborhood (strata 1 or 2)

    • Renewable through graduation unless student is retained in a grade

    • Vouchers awarded by lottery if demand exceeds supply

    • Covered about 60% of fees

  • Scope

    • 216 Municipalities have Participated

    • Over 125,000 secondary students have received support

Previous work on colombia
Previous Work on Colombia

  • Angrist, Bettinger, Bloom, King, Kremer (AER 2002)

  • Surveyed Voucher Applicants from Bogotá 1995 Lottery

  • Compared Voucher Lottery Winners and Losers

  • Effects after Three Years

  • Key Findings on Voucher Recipients:

    • Increased Usage of Private Schools

    • Higher Educational Attainment

    • No Difference in Drop-out Rates

    • Less Grade Repetition

    • Higher Test Scores

    • Less Incidence of Teen-age Employment

More previous work on colombia
More Previous Work on Colombia

  • Angrist, Bettinger, Kremer (AER 2006)

  • Tracked Applicants to Bogotá 1995 Lottery Using Administrative Records

  • Compared Voucher Lottery Winners and Losers

  • Effects after Six to Seven Years

  • Key Findings on Voucher Recipients:

    • Increased Likelihood of Taking College Entrance Exam

    • Improved Exam Performance in Math and Language

Other details on colombia s paces
Other Details on Colombia’s PACES

  • Students Had to be Accepted at a Private School PRIOR to the Voucher Lottery

    • Some Students Applied to Vocational Schools

    • Vocational Schools May Attract “Worse” Peers

  • The Voucher was Portable in Theory but Not Practice

    • 1998 MIT Survey of Voucher Applicants Shows that Voucher Winners Did Not Retain Voucher When Transferring Schools

Voucher winners and vocational schools
Voucher Winners and Vocational Schools

  • Voucher Winners who Applied to Vocational Schools Stay in Vocational Schools

  • Lack of Portability Creates Rigidity

    • Voucher Winners Stay Even if School is Suboptimal

  • Did Vocational Schools Have “Worse” Peers?

Were vocational schools worse
Were Vocational Schools Worse?

  • WB Funded School Survey in 2006

  • Attempted to Contact 300 Schools

    • Chose Schools with Most Voucher Applicants Attending

    • Schools Represented 85 Percent of Voucher Applicants

  • Survey Gathered Significant Data on Peer and School Quality

Comparing peer quality
Comparing Peer Quality

  • Estimate for Sample of Students Who Applied to Vocational Schools Prior to Lottery

    Wi = α + γVi +πZi+ ui

    Wi= School characteristic of student i

    Vi = Student i is voucher winner

    Zi = Other Student Characteristics

  • Key issue will be low sample size. We only know schools of attendance for about 200 voucher students who had wanted to attend vocational school.

    • Pooling Estimates

How to increase power
How to Increase Power?

  • Average Effect Sizes

    • Normalize Measures

      • Standard Deviation Units

      • Monotonicity

    • Estimate Effect Sizes Simultaneously

      • Fully Interacted Model

      • Similar to Seemingly Unrelated Regression

    • Combine Coefficients

  • Kolmogorov-Smirnov

    • If there is no Effect of a Program, the Family of T-Statistics Should Behave Like Normal Distribution

    • Doesn’t Account for Correlation Between Outcomes

Key results on peer quality
Key Results on Peer Quality

  • Among Voucher Applicants to Vocational Schools, Winners’ Peers Are

    • Less Likely to Attend College

    • Less Likely to Graduate

    • More Likely to Attend Remedial Programs

    • Attend Schools with Lower Fees

  • Voucher Winners’ Schools Also Appear to Have

    • Less Qualified Teachers

    • More Facilities on Campus

  • Same Differences are not Present Among Applicants to Non-Voucher Schools

Key conclusions
Key Conclusions

  • Among Students Who Originally Applied to Vocational Schools, Voucher Winners . . .

    • Attended Schools with Worse Observable Characteristics

    • Had Higher Likelihood of Taking the ICFES College Entrance Exam

    • Had Higher Test Scores on ICFES Exam

  • Peer Effects cannot Explain Voucher Effects

Voucher mechanisms
Voucher Mechanisms?

  • Incentives

    • Vouchers were Renewable Conditional on Passing

    • Emerging Literature on Incentives (e.g. Kremer, Miguel, and Thornton 2005)

  • Attending School that Students Value More

    • Vocational Schools Increasingly Focused on Emerging Service Industry

    • Private Sector Has Adjusted Quickly to Changes in Labor Market

    • Differences in Apprenticeship Opportunities

    • Industrial versus Commercial Education Curricula

      • Limited Commercial Education Slots in Public Sector

      • Private Commercial Schools Retain Students

In conclusion
In Conclusion

  • Peer Effects are Important in Education

  • Disentangling Voucher and Peer Effects is Difficult

    • Need Unique Experiment where Vouchers Assign Students to “Worse” Peers

    • Applicants to Vocational Schools (PRIOR) to Colombian Voucher Lottery

  • Vocational Voucher Winners Attend Schools with “Worse” Peers

  • Vocational Voucher Winners Have Higher Academic Achievement Than Voucher Lottery Losers

  • Peer Effects May Not Explain the Voucher Effects

  • Other Mechanisms are Plausible