What Happens when Separate and Unequal School Districts Merge?

88 Pages Posted: 29 Jun 2020

See all articles by Robert Aue

Robert Aue

affiliation not provided to SSRN

Thilo Klein

ZEW – Leibniz Centre for European Economic Research

Josué Ortega

Queen’s Management School, Queen’s University Belfast

Multiple version iconThere are 2 versions of this paper

Date Written: June 26, 2020

Abstract

We study the welfare effects of school district consolidation, i.e. the integration of disjoint school districts into a centralised clearinghouse. We show theoretically that, in the worst-case scenario, district consolidation may unambiguously reduce students' welfare, even if the student-optimal stable matching is consistently chosen. However, on average all students experience expected welfare gains from district consolidation, particularly those who belong to smaller and over-demanded districts. Using data from the Hungarian secondary school assignment mechanism, we compute the actual welfare gains from district consolidation in Budapest and compare these to our theoretical predictions. We empirically document substantial welfare gains from district consolidation for students, equivalent to attending a school five kilometres closer to the students' home addresses. As an important building block of our empirical strategy, we describe a method to consistently estimate students' preferences over schools and vice versa that does not fully assume that students report their preferences truthfully in the student-proposing deferred acceptance algorithm.

Keywords: school district consolidation, integration of matching markets, preference estimation without truth-telling

JEL Classification: C78, I21

Suggested Citation

Aue, Robert and Klein, Thilo and Ortega, Josué, What Happens when Separate and Unequal School Districts Merge? (June 26, 2020). QMS Research Paper 2020/06, Available at SSRN: https://ssrn.com/abstract=3636103 or http://dx.doi.org/10.2139/ssrn.3636103

Robert Aue

affiliation not provided to SSRN

Thilo Klein

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Josué Ortega (Contact Author)

Queen’s Management School, Queen’s University Belfast ( email )

185 Stranmillis Road, Riddel Hall
Belfast, BT9 5EE
United Kingdom

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