School vouchers in practice:: competition will not hurt you

Since the introduction of school vouchers in 1992, independent and public schools in Sweden operate on equal terms. We analyze the effects of competition on the public schools using data on the results of 28,000 ninth graders. Because the decision on which school to attend is a choice variable, sample selection models are used. To account for the potential endogeneity of the share of students attending independent schools, we use instrumental variable estimation. We also estimate panel data models on 288 Swedish municipalities. Our findings support the hypothesis that school results in public schools improve due to competition. (C) 2004 Elsevier B.V. All rights reserved.