School Choice, Competition, and Aggregate School Quality

This paper develops and estimates an empirical model that allows for evaluating the impact of charter school choice on education quality in the aggregate. We estimate the model using student-level data from North Carolina. Using the model to counterfactually reverse North Carolina's removal of its statewide charter school cap, we show that the policy raised the average public school's value-added by around 0.01σ (on the student test score distribution). This competitive response drives the aggregate learning gain, worth about $2,000 per student. We further use model simulations to quantify the expected human capital returns to the marginal charter school, which show that policies that steer entrants to disadvantaged and underserved neighborhoods stand to amplify the impact of charter school expansion.