Destructive Creation: School Turnover and Educational Attainment

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Destructive Creation: School Turnover and Educational Attainment

Autores: Nicolás Grau, Daniel Hojman, Cristian Labra, Alejandra Mizala

In this paper we analyze the effect of school entry and exit in the Chilean market- oriented educational system. During the period 1994-2012 nearly 2,150 schools closed (more than 2,800 if pre-K and kindergarten centers are included), nearly one-fifth of the current stock of schools. Close to 3,800 new schools entered the school system, mostly voucher private schools. Given this significant school turnover we estimate the potential ”productivity gains” associated to market’s creative destruction dynamics by studying its impact on standardized achievement tests. We find that, at the municipality level, school turnover predicts only minor changes in school performance after controlling for parents socioeconomic status. Finally, we estimate the potential educational costs of this dynamics, trying to identify the causal effect of school closure on grade repetition and high school dropout rates. Using a large panel of individual student data that contains academic achievement and socio-demographic controls, we identify a causal effect of school closures on grade retention and school dropouts. School exit is associated with a 50 per cent increase in the probability of grade repetition (2.5 percentage points) and a 79 per cent increase the probability school dropout in tenth grade (1.1 percentage points).