Competition and public high school performance

• The performance of public high schools that compete with each other is examined.
• A categorical DEA model is used to measure relative performance.
• Differences in competition are measured using a Herfindahl index.
• Higher performance is associated with higher competition, moderated by school size.
• A widening gap in performance is observed between the largest and smallest schools.

Increasing the level of school competition has been suggested as a way to improve school performance. This study examines one of the most extreme examples of such reform using data from New Zealand public high schools. In the 1990s school zoning was abolished in New Zealand and public schools competed for students, not just with private schools, but also with each other. A categorical Data Envelopment Analysis model using data on school resources and student academic performance, stratified using student socio-economic characteristics, is used to calculate efficiency scores for schools. A regression model is then used to analyse differences in these efficiency scores and their relationship to different levels of competition.The study finds average school performance tends to be higher when schools are located in areas of high competition. However, this result appears to vary depending on school size, suggesting that competition can lead to a widening in the gap between the best and worst performing schools. Long-term this is likely to result in the inefficient use of fixed public resources, as public school survival is only indirectly related to performance.