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Distorted quality signals in school markets

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  • Cuesta, José Ignacio
  • González, Felipe
  • Larroulet Philippi, Cristian

Abstract

Information plays a key role in markets with consumer choice. In education, data on schools is often gathered through standardized testing. However, the use of these tests has been controversial because of distortions in the metric itself. We study the Chilean educational market and document that low-performing students are underrepresented in test days, generating distortions in school quality information. These distorted quality signals affect parents' school choice and induce misallocation of public programs. These results provide novel evidence for the costs that distortions in quality signals generated by standardized tests in accountability systems impose on educational markets.

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  • Cuesta, José Ignacio & González, Felipe & Larroulet Philippi, Cristian, 2020. "Distorted quality signals in school markets," Journal of Development Economics, Elsevier, vol. 147(C).
    • Handle: RePEc:eee:deveco:v:147:y:2020:i:c:s0304387820301073
    DOI: 10.1016/j.jdeveco.2020.102532
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    Cited by:

    1. Gonzalez, Felipe & Prem, Mounu, 2020. "Police Repression and Protest Behavior: Evidence from Student Protests in Chile," SocArXiv 3xk5r, Center for Open Science.
    2. Bautista, María Angélica & González, Felipe & Martínez, Luis R. & Muñoz, Pablo & Prem, Mounu, 2023. "The intergenerational transmission of higher education: Evidence from the 1973 coup in Chile," Explorations in Economic History, Elsevier, vol. 90(C).
    3. Christopher A. Neilson, 2021. "Targeted Vouchers, Competition Among Schools, and the Academic Achievement of Poor Students," Working Papers 2021-48, Princeton University. Economics Department..
    4. Bautista, María Angélica & Gonzalez, Felipe & Martinez, Luis R. & Muñoz, Pablo & Prem, Mounu, 2022. "The Intergenerational Transmission of College: Evidence from the 1973 Coup in Chile," SocArXiv eyw2a, Center for Open Science.

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    More about this item

    Keywords

    Accountability; Schools; Quality; Disclosure; Choice;
    All these keywords.

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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