Who Participates?

An Analysis of School Participation Decisions in Two Voucher Programs in the United States.

The expansion of private school choice programs has been accompanied by a growing call for regulation of those programs. Individual private schools decide whether to participate in voucher programs based on expected benefits (additional voucher revenues) and expected costs (additional red tape). An unintended consequence of attaching heavy government regulation to voucher programs is that it raises the costs of participation, which could reduce the number of private schools available to the children who need them the most. Moreover, we hypothesize that lower-quality schools are more likely to participate in regulated voucher programs because they are the most desperate for additional enrollment and funding.

We use probit regression analysis to examine the quality of schools that elected to participate in voucher programs in Ohio and Milwaukee. Using tuition and enrollment levels—proxies for price and quantity demanded — we find evidence suggesting that lower-quality schools are more likely to participate in voucher programs. Specifically, a $1,000 increase in tuition is associated with 3 percent lower likelihood of participation in the Milwaukee voucher program and a 3.8 percent lower likelihood of participation in the Ohio Educational Choice voucher program. We also find that a one-point increase in a GreatSchools review score is associated with a 14.8 percent reduction in the likelihood of voucher program participation in Milwaukee. (GreatSchools is an online nonprofit that provides educational information and reviews for private, public, and charter schools.) Ironically, while regulators hope to prevent disadvantaged families from choosing bad schools, voucher program regulations appear to limit the quality of educational options available to low-income families in both Milwaukee and Ohio.

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