Why Have Test Scores and Segregation Risen in Chile? School Choice, School Resources, or Family Resources?

Debates in education policy draw on different theories about children's achievement. The school resource theory holds that achievement will rise when schools are given more resources, such as larger budgets and smaller classes. The school competition theory holds that achievement rises when schools compete for students, though critics counter that school choice leads to greater segregation. The family resources theory holds that children's achievement is shaped less by schools than by parental income and education.We test all three theories in Chile between 2002 and 2013, when reading and math scores rose by 0.2-0.3 standard deviations. Rising test scores are popularly attributed to Chile's school choice system, the largest in the world, but Chile has also experienced substantial increases in parental income and education, along with reductions in class size.The results favor the family resource theory. In a longitudinal regression with municipality fixed effects, we find that at least half of the rise in test scores was due to increases in parental education, though not to increases in family income. Little of the rise was due to shrinking class sizes, and none was due to school competition. Results for segregation were more fragile, but lent limited support to the view that segregation increased with school choice