DOES PRIVATE SCHOOLING IMPROVE INTERNATIONAL TEST SCORES? AN INSTRUMENTAL VARIABLES FIXED EFFECTS ANALYSIS OF THE IMPACT OF PRIVATE SCHOOLING ON PISA SCORES
United States President Donald Trump has called for a twenty-billion-dollar increase in federal funding of private school choice programmes for the nation. If the proposed policy takes place in the U.S., many other nation-states may follow suit. What impacts would the proposed policy have within the U.S. and abroad? While many private school choice advocates believe that competitive forces would enhance educational quality while minimizing costs (Friedman and Friedman 1990; Neal 2000), critics claim that the education sector may not behave like other industries (Gutmann and Ben-Porath 1987).
For instance, if families have the ability to choose their educational product, and they do not have the information required to make informed decisions, they may choose schools that actually harm their children in the short-run. Additionally, since individual interests may differ from social interests, families may not choose an educational product that is effective at inculcating math, reading, and science skills (Boyles 2004; Saltman 2000). If families do not value these skills which are measured by standardised assessments, we may expect that access to private schools would reduce overall test scores.
However, if individual families choose educational products that improve standardised test scores, we might expect to observe improved Programme for International Student Assessment (PISA) scores resulting from increases in access to private schooling. In theory, a deviation from the public schooling monopoly on public funding within education systems around the world could increase educational quality through enhanced competitive pressures for schools to improve (Hoxby 2007; Chubb and Moe 2011; Smith 1776).
We estimate the effect of private schooling on Programme for International Student Assessment (PISA) scores of 62 countries across the globe from 2000 to 2012. We employ time and country-fixed effects regression models and also use the short-run demand for schooling within a country and year as a new instrument for private share of schooling enrollment. We find evidence to suggest that increased private schooling leads to improved PISA scores around the world.