Supply and Demand in a Public School Choice Program

This study examines parents’ demand for sending their children to a public school located outside their residential school district. Using a unique data set that contains information concerning both inter-district transfers and rejections of transfer applications, I am able to identify which school district characteristics attract the greatest demand for incoming transfers. The analyses reveal that mean student test scores are stronger predictors of transfer demand than both students’ socio-economic characteristics and school district spending, suggesting that parents care more about outcomes than inputs. In addition, while districts are only supposed to reject transfer students due to capacity concerns, I find evidence that districts also constrain the supply of transfer spaces due to concerns about potential negative peer effects. These findings contribute to the literature concerning the parental demand for schooling and provide information concerning the possible effects of the No Child Left Behind Act’s school choice provisions on the redistribution of student enrollments.