Effects of school choice on the margin: The cream is already skimmed

Critics of school choice argue that cream-skimming will worsen outcomes for those left behind in public schools. Since “high ability” families may have already sorted themselves out of the schools in question, this paper will examine whether existing within-school heterogeneity leaves any scope for cream-skimming to operate. It asks, “given the current level of within-school heterogeneity, how strong would peer effects have to be to significantly worsen outcomes for those left behind?” In order for cream-skimming to lower math test scores by one half-year's progress, the peer effect would have to be as strong as increasing class sizes by 8–20 students, or cutting per-student funding by $400–2000. These results indicate that current levels of within-school heterogeneity are so low that peer effects would have to be unrealistically strong to give cream-skimming any bite.