Free school choice effects on HE attainment, employment, earnings, and social outcomes in adulthood

Most research on in the economics of education has focused on educational outcomes, especially test scores. In the past decade, however, a growing literature has begun to analyse the impact on overall well being later in life. In the school choice literature, however, the focus has mostly been on the impact of attending a specific school rather than the overall effect as a result of choice and competition. Furthermore, no one has hitherto been able to analyse the impact of choice and competition on social outcomes in adult life, including employment prospects and earnings.

In this paper, Professor Victor Lavy provides the first ever estimates in this respect. He analyses a school choice experiment at the secondary level in Tel-Aviv, Israel, which started in 1994. The experiment was the first move towards school choice since the Israeli government’s decision to enforce compulsory integration via bussing in 1968. The idea behind the experiment was to ensure that poorer kids had access to better schools, stimulate higher achievement via competition, and facilitate a better match between pupils and schools. In 1996, the programme was expanded to another district, and again in 1998, and, finally, in 1999 it included the whole city of Tel-Aviv.

The author’s previous research found that the programme had a systemic positive impact on test scores at the end of upper-secondary school on all pupils subjected to the programme. In the new study, he extends this research to also look at later outcomes in life, using rigorous econometric methods to separate causation from correlation. He finds that school choice has important positive effects on a range of longer-term outcomes. First, it increases post-secondary schooling enrolment and years of schooling. The gains were mostly in academic colleges and teacher colleges, among more disadvantaged pupils and in university enrolment and years of university schooling among pupils from higher socio-economic backgrounds.

Most important, however, he finds that being subjected to the school choice programme increased earnings by 7-12 per cent at the age of 28-30. These are sizable gains and can be explained by the improvements in test scores at the end of high school. Furthermore, he finds that school choice also had a strong negative impact on disability transfers and the proportion of pupils eligible for such transfers. However, there were no effects on marriage and fertility outcomes.

The conclusion is that the end of bussing and the introduction of school choice in Tel-Aviv had significantly positive outcomes among pupils also in adulthood. It is important to note that the programme involved a strong increase in choice opportunities given the baseline situation of bussing. In contrast, in England and other western countries, parents most often have the opportunity to move houses in order to change schools prior to the introduction of such programmes. If residential-based school choice also generates positive outcomes, which there is some evidence to suggest, it could perhaps explain why hitherto school choice plans in Europe and America have mostly had small-to-medium positive effects. Moving from bussing to school choice is a much larger step than moving from choice via the mortgage to the slight increases in choice opportunities that school choice programmes can offer in severely supply-restricted school markets. This in turn suggests that expansions of school choice are unlikely to generate large increases in outcomes, unless we simultaneously implement more radical measures to sever the link between residence and school.

Gabriel H. Sahlgren

This comment piece is also the Editor's Pick in the CMRE Monthly Research Digest (January 2015). The piece reviews a paper by Professor Victor Levy, ‘Long Run Effects of Free School Choice: College Attainment, Employment, Earnings, and Social Outcomes at Adulthood', NBER Working Paper No. 20843. A free copy of an early version of the working paper may be downloaded here. The published version of the Working Paper may be downloaded by subscription here.

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