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The Effect of Inter-School District Competition on Student Achievement: The Role of Long-Standing State Policies Prohibiting the Formation of New School Districts

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Abstract

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.

Keywords

  • School District
  • Large Market
  • Metropolitan Statistical Area
  • School Quality
  • Small Market

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Notes

  1. 1.

    Note also that having more school districts makes it possible to have a more complete sorting of families according to their desired level of school quality. See Tiebout (1956).

  2. 2.

    In related research, Hoxby (2000) finds that per-pupil spending is lower in metropolitan areas with greater choice. Kenny and Schmidt (1994) find that state-wide and county-wide districts are less efficient than districts where competition is present. The laws that prevent within-county competition leads to a higher cost of education. As a result, these monopoly-like school districts spend an additional $866.5 million each year (1992 dollars).

  3. 3.

    See Ross et al. (2014) for an interesting study of the alignment of municipal boundaries and school district boundaries on class size.

  4. 4.

    The county of St. James, Louisiana has a population of nearly 21,000 land area of 246 mi\(^2\) and population density of 84 people/mi\(^2\).

  5. 5.

    The earliest data available are from 1947 and obtained from the Council of State Governments (2002).

  6. 6.

    Nevada had 196 school districts in 1952 but due to a funding crisis, consolidated to 17 districts after 1954 (Strang 1987).

  7. 7.

    Admittedly, this is a slight misnomer, since DC is a federal district and not a state.

  8. 8.

    The spline functions are defined as follows:

    $$\begin{aligned} \textit{MarketSizeSpline}1 = \left( {\begin{array}{c}\textit{MarketSize} \; \textit{if} \; \textit{MarketSize} \le M^*\\ M^* \; \textit{if} \; \textit{MarketSize}> M^*\end{array}}\right) \\ \textit{MarketSizeSpline}2 = \left( {\begin{array}{c}0 \; if \; \textit{MarketSize} \le M^*\\ \textit{MarketSize-M}* \; \textit{if} \; \textit{Markesize} > M^*\end{array}}\right) \\ \end{aligned}$$

    .

  9. 9.

    See Hoxby (2000), Zanzig (1997), and Rothstein (2007).

  10. 10.

    We also used raw scores as the dependent variable in all regressions, including grade dummies. We do not report these results here, as they were very similar.

  11. 11.

    Kenny and Schmidt (1994) and Bureau (2012).

  12. 12.

    See Fischel (2009) for a fascinating account of the determination of the number of school districts in the early 1900s.

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Sherron, K., Kenny, L.W. (2017). The Effect of Inter-School District Competition on Student Achievement: The Role of Long-Standing State Policies Prohibiting the Formation of New School Districts. In: Hall, J. (eds) Explorations in Public Sector Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-47828-9_9

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