Responses of private and public schools to voucher funding

The post-communist Czech Republic provides a laboratory in which to investigate possible responses to the adoption of universal education vouchers. Private schools appear to have arisen in response to distinct market incentives. They are more common in fields where public school inertia has resulted in an under-supply of available slots. They are also more common where the public schools appear to be doing a worse job in their primary educational mission, as demonstrated by the success rate of academic secondary schools in obtaining university admission for their graduates. Public schools facing private competition improve their performance. They spend a larger fraction of their resources on classroom instruction and significantly reduce class sizes. Furthermore, Czech public academic secondary schools facing significant private competition by 1996 substantially improved their relative success in obtaining university admissions for their graduates between 1996 and 1998. The rise of private schools, however, also spurred maneuvering by the administrations of public schools to preserve these schools’ entrenched position, pointing out how important it is that any voucher system be simple and leave as little opportunity as possible for discretionary actions on the part of implementing officials.

► Private schools appear to have arisen in response to distinct market incentives.
► They are more common in fields where public school inertia has resulted in an under-supply of available slots.
► They are also more common where the public schools appear to be doing a worse job in their primary educational mission.
► Public schools facing private competition improve their performance.
► They spend a larger fraction of their resources on classroom instruction and significantly reduce class sizes.