DP16853 Pulled-in and Crowded-out: Heterogeneous Outcomes of Merit-based School Choice

Author(s): Antonio Dalla Zuanna, Kai Liu, Kjell G Salvanes
Publication Date: January 2022
Keyword(s): Crowding out, Meritocratic access, School choice
JEL(s): H70, I24
Programme Areas: Labour Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=16853

We study the effects of changing the rule that defines how students are selected into high schools in a context where school capacity is fixed. Schools for which demand exceeds supply must necessarily exclude some students from enrollment. We provide a theoretical framework to analyze the overall effect of policy changes, taking into account the crowding-out effect. By exploiting a reform that implemented merit-based allocation in Norway, we show that we can identify the relevant parameters. The reform had an overall negative effect because of the negative impact on crowded-out students. Different allocation rules would result in higher average outcomes.