Efforts to estimate the effect of having more school districts (i.e., having more competition among school districts) have been hampered by the difficulty of finding a good instrument for the number of school districts. We identify 9 states in which the state requires that the school districts be county-wide or state-wide; these laws have been in place for almost 7 decades. In states with no restrictions on the formation of school districts, larger metropolitan areas have more school districts, and thus more inter-district competition. As expected, student test scores are higher in larger metro areas that do not require county-wide or state-wide districts. On the other hand, test scores are no higher in large metro areas than in small metro areas in states that prohibit any rise in the number of districts as the metro area grows.
- School District
- Large Market
- Metropolitan Statistical Area
- School Quality
- Small Market
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