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Cheaper by the Dozen: Using Sibling Discounts at Catholic Schools to Estimate the Price Elasticity of Private School Attendance

Author

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  • Susan Dynarski
  • Jonathan Gruber
  • Danielle Li
Abstract
The effect of vouchers on sorting between private and public schools depends upon the price elasticity of demand for private schooling. Estimating this elasticity is empirically challenging because prices and quantities are jointly determined in the market for private schooling. We exploit a unique and previously undocumented source of variation in private school tuition to estimate this key parameter. A majority of Catholic elementary schools offer discounts to families that enroll more than one child in the school in a given year. Catholic school tuition costs therefore depend upon the interaction of the number and spacing of a family�s children with the pricing policies of the local school. This within-neighborhood variation in tuition prices allows us to control for unobserved determinants of demand with a fine set of geographic fixed effects, while still identifying the price parameter. We use data from 3700 Catholic schools, matched to restricted Census data that identifies geography at the block level. We find that a standard deviation decrease in tuition prices increases the probability that a family will send its children to private school by one-half percentage point, which translates into an elasticity of Catholic school attendance with respect to tuition costs of -0.19. Our subgroup results suggest that a voucher program would disproportionately induce into private schools those who, along observable dimensions, are unlike those who currently attend private school.

Suggested Citation

  • Susan Dynarski & Jonathan Gruber & Danielle Li, 2011. "Cheaper by the Dozen: Using Sibling Discounts at Catholic Schools to Estimate the Price Elasticity of Private School Attendance," Working Papers 11-34, Center for Economic Studies, U.S. Census Bureau.
    • Handle: RePEc:cen:wpaper:11-34
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    References listed on IDEAS

    as
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    1. Price elasticity of school attendance
      by Kevin Denny in Geary Behaviour Centre on 2009-11-01 14:18:00

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    2. Pedro Carneiro & Jishnu Das & Hugo Reis, 2024. "The Value of Private Schools: Evidence from Pakistan," The Review of Economics and Statistics, MIT Press, vol. 106(5), pages 1301-1318, September.
    3. Tue Gørgens & Chris Ryan & Guochang Zhao, 2020. "Private School Usage in Australia 1975–2010: Evidence from the Household Expenditure Surveys," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 53(2), pages 198-213, June.
    4. Michael Dinerstein & Troy D. Smith, 2021. "Quantifying the Supply Response of Private Schools to Public Policies," American Economic Review, American Economic Association, vol. 111(10), pages 3376-3417, October.
    5. Joseph G. Altonji & Ching-I Huang & Christopher R. Taber, 2015. "Estimating the Cream Skimming Effect of School Choice," Journal of Political Economy, University of Chicago Press, vol. 123(2), pages 266-324.
    6. Hungerman, Daniel M. & Rinz, Kevin, 2016. "Where does voucher funding go? How large-scale subsidy programs affect private-school revenue, enrollment, and prices," Journal of Public Economics, Elsevier, vol. 136(C), pages 62-85.
    7. Andrew A. Samwick, 2013. "Donating the Voucher: An Alternative Tax Treatment of Private School Enrollment," NBER Chapters, in: Tax Policy and the Economy, Volume 27, pages 125-160, National Bureau of Economic Research, Inc.
    8. Figlio, David & Hart, Cassandra M.D. & Metzger, Molly, 2010. "Who uses a means-tested scholarship, and what do they choose?," Economics of Education Review, Elsevier, vol. 29(2), pages 301-317, April.
    9. Michela Tincani, 2014. "School Vouchers and the Joint Sorting of Students and Teachers," Working Papers 2014-012, Human Capital and Economic Opportunity Working Group.

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    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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