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A. Mizala1, F. Torche2

1Universidad de Chile (CHILE)
2New York University (UNITED STATES)
Chile implemented a universal school voucher system in the early 1980s. In this system, the government pays a flat per-student subsidy to all schools –public and private – insofar as they did not charge tuition fees to students. The Chilean school voucher was flat, i.e. it did not vary with family socioeconomic resources.

The institutional features of the Chilean voucher system have been argued to provide incentives for private schools to select socioeconomically advantaged and able students, rather than to increase their value added. The result is substantial socioeconomic inequalities in educational achievement and socioeconomic segregation between school sector, and across schools within sector (Torche 2005, Mizala and Torche 2012).

A major reform known as “preferential school voucher” (Subvencion Escolar Preferencial or SEP in Spanish) was approved by Congress in 2008. The reform establishes an additional per-student subsidy for economically disadvantaged students– designated as “preferential students”, and an additional subsidy for schools with a high concentration of disadvantaged students. The reform was initially applied to students enrolled in pre-Kinder through 4th grade, and has expanded one grade per year, such that it applies to students up to 8th grade in 2012.

This reform amounts to transforming flat voucher system into a means-tested one. This change emerges from the assumption that it is more expensive to educate low-resource students, and that schools need to be compensated for this additional cost in order to reduce incentives to “cream-skim” advantaged students. The reform substantially increased the funds paid for socioeconomically disadvantaged students.

Schools’ enrollment into the means-tested voucher program is voluntary. In the first year of the reform as many as 93% of public school enrolled in the program but only 51% of private-voucher schools did so. By 2011 99% of public schools and 73% of private-voucher schools had enrolled.

An important question is whether the new means-tested voucher system induces an increase in students’ test scores. Addressing this question requires a causal inference approach that formulates a plausible counterfactual. Because not all schools private-voucher schools entered the program at the same time, phased-in entry can be used to create such counterfactual and to evaluate the effects of the school enrollment into the means-tested voucher system on students’ test scores.

A recent study using such counterfactual approach finds that SEP had positive effects on school-level test scores (Correa et al. (2012). The effect captured by this study is, however, an average treatment effect. Such effect may hide substantial heterogeneity across schools.

In this paper we use a fixed effects model to evaluate the impact of the means-tested voucher on the schools’ national standardized achievement tests, its evolution trough time and the heterogeneity across schools of different socioeconomic status. Our results indicate that SEP has a positive effect on the educational results which persists through time, and that this effect is stronger on the socioeconomic disadvantaged schools. All these results are consistent with the SEP objectives.