Does School Choice Increase School Quality?

Charter school competition raised the composite test scores in district schools, even though the students leaving district schools for the charters tended to have above average test scores.

In 1996-7, North Carolina had no charter schools. Three years later its 91 charter schools had enrolled 14,899 students, about 1 percent of the state's total public school enrollment. In Does School Choice Increase School Quality? (NBER Working Paper No. 9683), George Holmes, Jeff DeSimone, and Nicholas Rupp use end of year test scores for grades three through eight from North Carolina's statewide testing program to explore whether the competition provided by charter schools had any effect on the test scores in public schools run by school districts.

Most charter schools opened in metropolitan areas, and 90 percent of district schools were within 13 miles of a charter school. The authors find that charter school competition raised the composite test scores in district schools, even though the students leaving district schools for the charters tended to have above average test scores. The gain was relatively large, roughly two to five times greater than the gain from decreasing the student-faculty ratio by 1, and more than "one-half of the average achievement gain of 1.7 percent in 1999-2000."

For comparison, the authors point out that the North Carolina Governor's Office proposed increasing achievement by reducing average class size by 1.8 students at a cost of $26 million in 2002. The data suggest that this would produce just one-third of the test score increase created by opening a neighboring charter school, a move that would not require any additional spending.

-- Linda Gorman