The Distributional Consequences of Public School Choice

School choice systems aspire to delink residential location and school assignments by allowing children to apply to schools outside of their neighborhood. However, the introduction of choice programs affects incentives to live in certain neighborhoods, which may undermine the goals of choice programs. We investigate this possibility by developing a model of public school and residential choice. For simplicity, we consider a world of (primarily) one-dimensional types, which could be interpreted either as wealth or status (of the family) or ability (of the child) or some combination of them.

A common rationale for adopting school choice is to improve the quality of school options for disadvantaged students. But, our analysis shows that market forces can undercut this approach, for if a school choice plan succeeds in narrowing the quality range between the lowest and highest quality schools, that change can be expected to compress the distribution of house prices in that town, thereby providing incentives for the lowest and highest types to exit from the town’s public schools.

A broader implication of our model is that systemic changes beyond the details of the school assignment system may be necessary to reduce inequalities in educational opportunities. Our model suggests that attacking the roots of schooling inequities has more promise than efforts solely designed to change the rules by which students are assigned to schools.