Supply-Side Voucher Market Entry
Observational StudyReview
Introducing large-scale educational vouchers can cause short-term classroom crowding unless private school supply expands dynamically to meet increased demand.
Picture this
When a government issues subsidized housing vouchers to thousands of families, existing apartment buildings quickly fill up. However, the guaranteed steady demand encourages developers to construct new housing units, expanding total housing supply and stabilizing prices.
What the evidence says
Issuing over 125,000 vouchers to low-income secondary students induced supply-side market entry, resulting in the creation of new private schools to absorb voucher demand.
- Who was studied
- N = 1,300 private secondary schools in Bogotá, Colombia.
- How
- Longitudinal observational tracking of private school supply creation following the implementation of the PACES voucher program.
What to do
Guarantee long-term voucher program funding commitments to incentivize private market entry and expand school supply capacity.
From the source
"A number of new schools are believed to have been created in response to Colombia's voucher program."
Are Educational Vouchers Only Redistributive?