Private vs Public Voucher Schools in Chile: New Evidence on Efficiency and Peer Effects

We estimate the treatment effect associated with attending a private instead of a public voucher school in the Chilean voucher system. We find a large and significant positive treatment effect. We analyze the influence of peer effects on our result by estimating new treatment parameters that control for peer group characteristics. When we do so, we still find a positive treatment parameter that is large in magnitude and statistically significant. Hence we conclude that the positive treatment effects are not due to peer effects and sorting, but rather stem from the greater efficiency of private voucher schools.