A Structural Model of Charter School Choice and Academic Achievement

Discussion Paper

Christopher Walters

May 2013

Lottery-based instrumental variables estimates show that Boston’s charter schools substantially increase test scores and close racial achievement gaps among their applicants.

A key policy question is whether charter expansion is likely to produce similar effects on a larger scale. This paper uses a structural model of school choice and academic achievement to extrapolate from IV estimates and predict the effects of charter expansion for the citywide achievement distribution in Boston. Estimates of the model suggest that charter applicants are negatively selected on achievement gains: low-income students and students with low prior achievement gain the most from charter attendance, but are unlikely to apply to charter schools. This form of selection implies that charter schools are likely to produce substantial gains for marginal students drawn in by expansion. Simulations suggest that realistic expansions are likely to reduce gaps in math scores between Boston and the rest of Massachusetts by 10 percent, and reduce racial achievement gaps by 5 percent.

Nevertheless, the estimates also imply that perceived application costs are high and that most students prefer traditional public school to charter schools, so large expansions are likely to leave many charter seats empty. These results suggest that the potential gains from charter expansion may be limited as much by demand as by supply.