Vouchers, Public School Response and the Role of Incentives: Evidence from Florida

In this paper, I analyze the behavior of public schools facing vouchers. The literature on the effect of voucher programs on public schools typically focuses on student and mean school scores. This paper tries to go inside the black box to investigate some of the ways in which schools facing the threat of vouchers in Florida behaved. Florida schools getting an 'F' grade are exposed to the threat of vouchers, while vouchers are implemented if they get another 'F' grade in the next three years. Exploiting the institutional details of the 1999 program, I analyze the incentives built into the system and investigate whether the threatened public schools behaved strategically to respond to incentives. There is strong evidence that they did respond to incentives. Using highly disaggregated school level data, a difference- in-differences estimation strategy as well as a regression discontinuity analysis, I find that the threatened schools tended to focus more on students below the minimum criteria cutoffs rather than equally on all, but interestingly, this improvement did not come at the expense of higher performing students. Second, consistent with incentives, they focused mostly on writing rather than reading and math. Finally, consistent with substantial costs associated with such reclassification during that period, there is not much evidence of relative reclassification of low performing students in to special education categories exempt from the calculation of grades. These results are robust to controlling for differential pre-program trends, changes in demographic compositions, mean reversion and sorting. These findings have important policy implications and subsequent grading rule changes in Florida suggest that these policy changes have been a response to public school behavior.Vouchers, Incentives, Strategic Behavior, Regression Discontinuity, Mean Reversion