Does immigration induce 'native flight' from public schools? Evidence from a large scale voucher program

Recent studies point to a positive correlation between ethnic heterogeneity due to immigration and the propensity of opting out from public schools for private alternatives. However, immigration across regions is hardly exogenous, which obstructs attempts to reveal causal mechanisms. This paper explores changes in the immigrant population in Danish municipalities 1992-2004, a period marked by a substantial influx of refugees, where a state-sponsored placement policy restricted their initial choice of residence. Besides such demographic changes, for more than hundred years Denmark has allowed parents to enroll their children into so called 'free schools', i.e. schools that are privately operated. Taken together, this provides a unique opportunity to determine if there has been 'native flight' from public schools to free schools. Results from this study indicate an increase in native Danes propensity to enroll their children in free schools as the share of children with immigrant background becomes larger in their municipality of residence. The effect is most pronounced in small and medium sized municipalities, while it seems absent in larger municipalities. One explanation for the latter holds that residential segregation within larger municipalities makes a choice of private alternatives less attractive.