Sorting, School Performance and Quality: Evidence from China

School choice reforms, such as lottery and voucher programs, give talented students the choice to sort out of low-performing schools but often leave disadvantaged students behind. This study shows how a Chinese city was successful in helping its low-performing schools to catch up by encouraging talented students to sort into its low-performing schools. The city’s education bureau identified several low-performing middle schools and guaranteed elite high school admission to their top ten-percent graduates. This paper documents that schools affected by this top-ten percent policy improved their performance by 0.3 standard deviation. To understand the underlying mechanisms, the city’s lottery system for middle school assignment is used to test for changes in composition and value-added. Conditional logit regressions show that sixth graders with high math scores and high socioeconomic status were more likely to choose a low-performing policy school after the policy introduction. Instrumental quantile treatment effect estimates show that the value-added gaps between policy schools and over-subscribed schools were closed for students at both higher and lower quantiles. The study suggests that incentives for better students to attend lower-performing schools help narrow not only the school performance gap but also the school quality gap.