Kraks Fond Seminar (7. november, 2019)

Hans Henrik Sievertsen, Lecturer in Economics at University of Bristol. He will present his paper about segregation in high schools.

Date: 7/11
Time: 14:00 – 15:00
Location: Kraks Fond Byforskning, Frederiksholms Kanal 30 1220 København K


Quasi-market competition in public service provision: User sorting and cream skimming

Although quasi-markets that introduce choice and competition between public service providers are intended to improve efficiency, researchers and policy makers have been concerned about ad-verse effects. This paper examines the consequences of quasi-market competition on segregation of users. First, we argue theoretically why strategic responses from the providers as well as self-selection by the users in quasi-markets may lead to segregation. Second, we examine empirically the impacts of a nationwide quasi-market policy that introduced choice and activity-based budgeting into Danish high schools. We exploit the substantial variation in the degree of competition that schools were exposed to because of the concentration of providers within a geographical area. Using a differences-in-differences design—and register data containing the full population of students over a 9-year period (N=209,517)—results show that polarization by ability increased sharply in response to the reform in high-competition areas relative to low-competition areas. These responses in high-competition regions appear to be driven both by changes in user sorting and by strategic behavior among public providers.

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