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Estimating an Equilibrium Model of Horizontal Competition in Education
1University of California, Los Angeles, National Bureau of Economic Research, Centre for Economic Policy Research, and Center for Effective Global Action.
The Journal of Political Economy
|March 15, 2023
Summary
Student-school match quality significantly impacts learning. In Pakistan, private schools favored wealthier students, worsening inequality and reducing overall welfare and educational outcomes.
Area of Science:
- Education Economics
- Market Structure Analysis
- Student Outcomes
Background:
- The impact of student-school fit on learning is significant but not fully quantified.
- Understanding how market structures influence these effects is crucial for educational policy.
Purpose of the Study:
- To quantify the importance of student-school matches in educational settings.
- To analyze how private school market structures affect educational equity and student learning.
- To explore the potential benefits of market interventions.
Main Methods:
- Developed a quantitative equilibrium model of school competition.
- Incorporated horizontal competition based on match quality.
- Estimated the model using data from Pakistan's private education sector.
Main Results:
- Quantified the substantial impact of good student-school matches on learning outcomes.
- Demonstrated that profit-maximizing private schools disproportionately benefit wealthier students.
- Showed that current market structures exacerbate inequality and reduce overall welfare and learning.
Conclusions:
- Student-school match quality is a critical determinant of educational success.
- Private school market dynamics in Pakistan lead to increased inequality.
- Policy interventions may be valuable for improving equity and learning outcomes in educational markets.
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