PRIVATE SCHOOL QUALITY IN ITALY

1. PRIVATE SCHOOL QUALITY IN ITALY (G. Bertola, D. Checchi, V. Oppedisano, 2007) Presentation of Alice Simone

2. Table of Contents • Introduction: What are we talking about? • Summary of the Results • Theoretical Motivation • Empirical Motivation: • Specification • Data • Empirical Evidence • Strengths and Weaknesses of the Paper • Policy Implications

3. Introduction: What are we talking about? • What is the role of private secondary school in Italy? • What is the advantage in choosing a private school? • Does private schooling complement or substitute students’ talent in determining life outcomes? • Should the government support private or public schooling?

4. Summary of the Results Both theoretically and empirically it is shown that in Italy private secondary schools attract richer, but less endowed with talent, students. • Private secondary schooling makes talent less relevant to university enrolment (see panel b of Figure1). • Remedial role for private school sector offering relatively low reward to talent and, therefore, attracting relatively low talent students. • A consistent portion of sorting based on talent takes place along the academic/vocational divide rather than along private/public dimension. • Negative interaction between private school attendance and talent (see table7). • Secondary private education in Italy is configured as to attract students from the bottom of the talent distribution.

5. Theoretical Motivation How heterogeneous students can be sorted across private and public schools? Individuals have: • Different talent θ • Different financial resources: +wealth−r Relevance of tuition fees φ is different across families: (1+r)φ where r is the discount rate Payoff of education depends on: • Type(cost) of school j • Talent θ • Interaction between school and talent Simplifications: • No peer effects • We disregard the fact that ability is innate or influenced on family/cultural background • Amount of resources spent in education is not considered • Only two type of schools are available (public schools=1; private=2)

6. Theoretical Motivation/2 • Payoff of education Y is a linear function of talent θ of an individual i, the parameter β isdifferent across schools j: • Considering two schools and the impact of tuition fees, a student will choose school 2 when Y2>Y1:

7. Theoretica Motivation/3 • When β1<β2: More talented and richer students choose the private school which gives better returns (panel a: positive slope dividing line in talent and interest rate space). • Whenβ1>β2: Public school rewards more strongly talent, attracts better students. Richer students, for a given talent, will prefer private school but the pool of students of private school is of lower quality (panel b).

8. Theoretical Motivation/4 • Private schools are always attended by richer students (when financial markets are imperfect) but they can be “better” than public only if the resources are spent to give to the talent of students a better reward. • If this is not the case, then private schools attract worse students and public schools attract the best ones. Worse but richer students will pay for having the same level of education that can be obtained in public schools that are too demanding for them.

9. Empirical specification • Strategy: estimate the empirical equation on data from private and public schools and then compare the estimate slope coefficient • Is talent re-warded more in private or public education? p: individual propensity of attending a private school Dummy variable: 1=private, 0 otherwise Z: vector of observable covariates γ; δ: coefficients to be estimates ε: standard error • When: β<0 and α>0 (the coefficients related to private school!) • Private school offers smaller re-wards to talent but the intercept of private schools is higher, it may be preferred to public school by low talent students.

10. Data • Surveys conducted by ISTAT in 1998, 2001, 2004 on a sample of individuals who had completed secondary school three years before being interviewed (1995, 1998, 2001). Percorsi di studio e di lavoro dei diplomati – Indagine 1998/2001/2004 • Preliminary considerations: • Choice of school is driven by different factors: talent, financial resources but also religious, ideological, geographic reasons other than educational quality. • The same variable can have effects on student’s talent, ability to pay private schools and also directly on the outcome (for example: “parental education”). Some data specifications for the analysis: • “Talent” θ variable is a proxy of: Marks ate the end of compulsory education Marks at the end of secondary school Number of grade repetitions. • single indicator (using factor analysis) • Endogenous variables: • Private school dummy • Interaction of private school with talent • Outcomes variables: Status of the respondent three years after completing secondary school (see table2) • university enrolment status • the amount of earnings when employed. • Instrumental variables (affect the choice of private school but not the situation after the three years): • Grandfather completed secondary school or college (1998 and 2001 surveys) • Private tutoring lessons (2004) • Regional dummies

12. Probability of college enrolment three years after secondary school

13. Probability of college enrolment three years after secondary school/2 • Talent is positively correlated with college enrolment (value is statistically significant at 1%). • Interaction between talent and private schooling is negative (but not very significant: only at 10% in 2004). • In the regression which control for also for the parents occupation and education (estimated by instrument variables) estimated coefficient of the interaction are larger  Regional and private tutoring dummies can explain some part of the private school choices.

14. In Table5 the marginal effects reported are computed at the sample mean of the regressor.; as the interaction can be different elsewhere… Figure3: interaction effects for each observation in the three surveys.The point estimates of interaction effect are negative when evaluated at all observation-specific values of the variables included in the probit specification.

15. Alternative estimation strategy: return to talent (in terms of probability of college enrolment) in separate subsamples (private/public). Survey of 1998 Talent’s association to college enrolment is estimated to be positive, however is more positive in public schools.Heckman procedure’s first stage: talent is positive associated with public schooling and negatively associated with private schooling (significant only in 1998 and 2004)

16. Alternative estimation strategy: return to talent (in terms of probability of college enrollment) in separate subsamples (private/public)/2 Survey of 2001 Survey of 2004

17. Probability of college enrolment along different school types: how the effect of private school interaction differs across school tracks?

18. Robustness check • Exclusion of regional dummies from the instrument set. • Inclusion of: • Parental occupation (mother or father self-employed when the student was 14-year-old) • Grandparents graduation (1998 and 2001) • Presence of individual tutoring lessons (2004) • Regional share of students attending private secondary school • there is correlation with the endogenous variable (dummy for private schooling) • little correlation with the dependent variable (college enrolment) • When including all the instruments, the result (of IV probit estimation) are coherent and quantitatively stronger.

19. Robustness check/2

20. Labour market outcomes • (log)wage function corrected by Heckman’s two steps procedure for selection into employment. • Problems: high talent individual tent to be in public schools and, in general, to continue to study Return to talent, looking at wage, over-represent low talent students. Respondents have completed secondary school three years before being interviewed. • Selection equation: control of selection into employment by parental background and secondary school types. • Wage determination equation features gender, age and talent.

21. Labour market outcomes/2

22. Display of data in the same format as the theoretical framework The slope coefficient of the line is the β, the effect on the proxied talent (previous school career in our data) on college enrolment and earnings given by private or public school.

23. Strengths • Consequences on policies, if the idea of remedial role of private school is proven to be true, are important. Foster the private education sector would not be a good way to enhance high talent students outcomes. • Results are consistent with other studies on the worse quality of private education sector compared to the public one in Italy (Brunello-Rocco, 2004). • In general the evidence on the return of private education is mixed. Different authors, with different measures, have tried to prove its better re-ward. (Brown-Belfield, 2001; Wright, 1999).

24. Weaknesses • Problems deriving from the data: • Proxy for talent: it is measured by looking at the previous school career of the student • Is the final mark a good indicator? Internal Commission, different schools, “diploma no-problem”. • Number of repetitions: is it consistent to claim that in private schools, as you pay a lot you would be also more easily promoted that in public schools? • College enrolment after three years: is it true signal of future graduation? Labour Market Outcomes: isn’t it too early to measures any re-ward? • Problems regarding the desired outcomes: • private schools may “weight” different outcomes differently. Giving social status could, indirectly, for example, enhance the possibility of greater earnings (better signal to employers) and so, also high talent students would choose to go into the private sector. Re-ward to talent, in this scenario, could be not a sufficient measure. • School quality of education is very difficult to observe: going beyond either test scores, or in our case, previous career, private school may be optimizing a vector of outcomes to include personality, self-confidence, social status (Brown Belfield, 2001)

25. Policy Implications • If private schools don’t give a better re-wards to student’s talent, the rational of private education sector must be different from the traditional one • The role of the private schools wouldn’t be offer a better service but help low (rich) talent students to achieve the same educational attainment, for example, than students in the public school. • Giving a school voucher to an high-talent student would be completely unnecessary. There would be no need for him to go to a private school. • Why the State should help private school if they don’t provide any “public interest” for the society? • Absolving this “remedial” role, private schools would foster a partial equality of outcomes (both low-richer and high talent students achieve an high school certificate) but what about low-poorer students? Furthermore, the very idea of schooling shouldn’t be to put everyone on the same level, disregarding the content of education itself.