The Role and Impact of Public-Private Partnerships in Education

spotlight
Spotlight on Chile
The case of Chile provides an example of a universal voucher scheme that presents mixed evidence of the impact of public-private
partnerships in education.
In the 1980s, Chile introduced a
universal voucher system with the
objective of making the education
system more efficient. The reform
enabled students to select the school of
their choice, either public or private,
and tied per-student public funding
to school enrollment. The rationale
behind this policy was that student
choice would encourage school competition
and increase accountability at the
local level by making schools responsive
to parental preferences. The provision
of public funding to private schools led
to the development of a school market
in which more than 20,000 new private
schools were created and private enrollment
rates increased from 32 percent
of all enrollments in 1985 to 51 percent
in 2005. In 2007–08, approximately 94
percent of all schools in Chile, of which
36 percent are private, received voucher
funding.
Nonetheless, empirical research
indicates that more than 20 years of
reform did not lead to improvements
in average academic achievement.
Moreover, there is evidence of the existence
of student segregation by socioeconomic
level and a public-private gap
in academic performance that favors
those students who were able to transfer
from public to private subsidized
schools. As it turns out, public schools
in Chile did not have a strong incentive
to compete, as very few of them were
closed despite declines in their enrollment
rates. On the other hand, private
schools responded to competition by
exercising their ability to attract and
select students. Recent research shows
that private subsidized schools have an
academic advantage, which seems to
be associated with their ability to select
the most able students and those with a
greater ability to pay. The beneficiaries
of the reform—those who were able to
transfer to private schools during the
basic education cycle (or “switchers”)—
have had higher labor market returns to
schooling investments than their peers
who continued in public schools. The
switchers mostly belonged to the middle
class and had better cognitive skills
than their peers who remained in public
schools. On the positive side, there is
some evidence of improved household
welfare due to parents being able to
select the school of their choice based
on their revealed preferences and the
government’s policy of targeting the
poorest schools to improve their educational
quality.
However, more recent evidence
shows that after years of stagnation,
results may be improving. Chilean
students demonstrated significant
improvements in their reading performance
in the Program for International
Student Assessment (PISA) test between
2000 and 2006, making them the top
Latin American country participating
in PISA, and ranking just behind Turkey
in the overall list of participants. In
reading, for example, Chile increased its
score by 33 points, equivalent to 0.3 of
a standard deviation, although it could
be argued that this improvement was
driven by the more able students. The
Chilean experience suggests that it may
take some time for school choice policies
to yield improvements in average
academic achievement. The government
is currently introducing policies that
address the problem of student segregation,
including preferential subsidies
to increase options for students from
poor families and the elimination of
student selection by subsidized schools.
New agencies are being established to
take responsibility for setting national
standards, tracking student progress,
and enforcing regulations relating to
schools’ academic performance. The
gap between the theory and the practice
of school choice still needs further
exploration. Open access to information
has made it possible to analyze the
effects of the Chilean experience; this is
another lesson from which other countries
can learn.
Sources: Hsieh and Urquiola 2003; McEwan
et al. 2008; Patrinos and Sakellariou 2008;
Contreras et al. 2008; OECD 2007; World Bank
2008.
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