The advantages of school competition
"The experience of colleges and universities shows that competition can force achievement down rather than improving it," writes Albert Shanker, president of the American Federation of Teachers, in one of his widely published advertorials. "There is little doubt that competition would force [elementary and secondary] schools to be sensitive to what customers want, but there's very little evidence that what they want is a rigorous education."
A recent study by a Massachusetts Institute of Technology Ph.D. candidate in economics, however, suggests that Shanker is wrong. In "Do Private Schools Provide Competition for Public Schools?," Caroline Minter Hoxby finds that "greater private school competitiveness significantly raises the quality of public schools, as measured by the educational attainment, wages, and high school graduation rates of public school students."
Using nationwide data on public and Catholic high schools, and controlling for variables such as religion, population homogeneity, parents' education, and household income, Hoxby estimates that "a 10 percentage point increase in the share of county[wide] secondary enrollment in Catholic schools improves public school students' educational attainment by .37 years and wages by 3 percent."
Hoxby contends that, in areas where private schools are popular alternatives, public schools must raise quality to maintain their enrollment. She presents some evidence that public schools react to competition with private schools by paying higher teacher salaries and spending more per pupil. But her statistical analysis finds that the increase in quality is accomplished mostly by means that don't require increased spending. She speculates that "it might be difficult to raise property tax rates when public school enrollment is falling."
Hoxby's results are significant because there is little research on the question of how competition affects public schools. "This paper presents firm evidence that public-school students benefit from private-school competition," she says.