The effects of competition between schools on educational outcomes: A review for the United States

This article systematically reviews U.S. evidence from cross-sectional research on educational outcomes when schools must compete with each other. Competition typically is measured by using either the Herfindahl Index or the enrollment rate at an alternative school choice. Outcomes are academic test scores, graduation/attainment, expenditures/efficiency, teacher quality, students' post-school wages, and local housing prices. The sampling strategy identified more than 41 relevant empirical studies. A sizable majority report beneficial effects of competition, and many report statistically significant correlations. For each study, the effect size of an increase of competition by one standard deviation is reported. The positive gains from competition are modest in scope with respect to realistic changes in levels of competition. The review also notes several methodological challenges and recommends caution in reasoning from point estimates to public policy.