For-profit schooling and the politics of education reform in Chile: When ideology trumps evidence

For-profit schooling is one of the most hotly debated issues in education policy discussions in Chile. Proponents argue that for-profit schools have incentives to reduce costs and to innovate, leading to both higher quality and greater efficiency in education. Critics maintain that for-profit schools cannot be trusted to place the interest of children over profitability. Buried in this position is the belief that for-profits would cut quality in the process of cutting costs. Researchers can gain insight into this debate by examining school systems where vouchers have been implemented on a large scale and where for-profit and non-profit school supply has increased. In 1981, Chile began financing public and most private schools with vouchers. Education in Chile occurs in a mixed market with 46 percent of students enrolled in public schools, 31 percent in for-profit voucher schools, 16 percent in non-profit (religious and secular) voucher schools, and 7 percent in private non-voucher schools. This paper compares the academic achievement of fourth and eighth-grade students across for-profit, non-profit and public schools. What I find is a mixed story. Initial results indicate that non-profits have a small advantage over for-profit and public schools and forprofit school students have slightly higher test scores than comparable public school students at fourth grade, once student and peer attributes and selection bias are controlled for. There is no significant difference in achievement between for-profit and public eighth grade students. When for-profits and non-profits are subdivided by ownership, for-profit chains and Catholic schools have a substantial advantage over other sectors. There is not a consistent statistically significant difference between for-profit independent and public schools. In some cases, evangelical schools produce the lowest achievement.