Market-Based Reforms of Public Schooling: Some Unpleasant Dynamics

Reforms in m any countries have attempted to increase the degree of competition in schooling markets. The partial implementation of market solutions has not always produced the uniform, system-wide rise in educational standards anticipated by economists advocating reform. In this paper we analyse schooling market outcomes utilizig a simple model of the type of local market created in England and Wales. Regulatory authorities and researchers have noted that within local English and Welsh schooling markets, reform has been associated with an increase in the diversity of school performance, with pre-existing school hierarchies being reinforced, ra ther than challenged. We show that both promotion of an indicator of school performance based upon unadjusted pupil attainment and the presence of peer group effects can generate these market outcomes.