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Cloaking Inequity: New Research: Vouchers Increase Segregation and Offer Benefits to the Few

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We already know that vouchers increase segregation and offer benefits to the few. We don’t need to implement decades of vouchers to just turn back later.

Findings from a newly released peer-reviewed study entitled Understanding How Universal Vouchers Have Impacted Urban School Districts’ Enrollment in Chile published in Education Policy Analysis Archives show that educational and mobility opportunities for families and students participating in a universal (everyone has access to them) voucher system are not equally distributed. Some families and students use and benefit from the system, while others will remain marginalized. Who benefits? The statistical results in this study demonstrate that students of relatively higher SES living in mid-high or mid-low poverty districts receive the benefit from vouchers. These students may move from one public school to another, from a public school to private-voucher school in the same area, from one district to another, or from a public school in an area to a private-voucher school in another district. Meanwhile, low-income counterparts living in high-poverty areas are excluded from the lionshare of the benefits in the voucher system and tend to remain at their public neighborhood school.

Voucher programs, which provide public funding for students to attend private schools, have become more popular in the United States in the last several decades. Currently there are 22 traditional voucher programs in operation across 14 states (including D.C.), and another 16 neo-voucher programs across six additional states for a total of 38 voucher programs in 20 states.[i]While most existing voucher programs in the U.S. are small-scale and targeted at low-income students (e.g. the Milwaukee Parental Choice Program, the Cleveland Scholarship and Tutoring Program, and the Washington DC program), there has recently been a push to expand programs to include students from middle-income families. For example, Florida, Indiana and Pennsylvania have considered legislation recently to either create new or expand existing school voucher programs for the middle class by loosening income requirements to apply and expanding state funding.

The push to extend voucher programs rests on the assumption that they will spur competition between public and private campuses, make schools more responsive to families and students, increase student achievement, and improve the effectiveness of all schools (Chubb & Moe, 1990; Friedman, 1962; Gallego, 2002; Gallego, 2004; Peterson, 2009; Sapelli & Vial, 2002). In addition, some researchers (e.g. Ladner & Brouillette, 2000) have argued that vouchers will improve school effectiveness by promoting competition between districts and between districts and private schools. A second assumption for supporting vouchers consists of the belief that vouchers will improve the educational opportunities of disadvantaged students (Sugarman, 1999), as well as contribute to their social integration with middle- and upper-class students. The argument is as follows: Since school choice is already available to upper-class families through residential mobility or through enrollment in private schools, expanding this right to low-income families through vouchers reduces stratification as parental income becomes less important in determining who attends private schools (Neal 2002, Nechyba, 2000).


Contrarily, voucher opponents posit that scaling-up vouchers will result in “cream skimming” and greater stratification between and within the public and private education sectors (Bellei, 2009; Goldhaber, 1999; Ladd, 2003, Hsieh & Urquiola, 2004; Hsieh & Urquiola, 2006; Torche, 2005). As a result, some schools (those that enroll more able or higher-income students) will improve, while others will remain low performing. Voucher critics also argue that similar “cream skimming” effects may be seen at the district level. According to Lubienski (2005) and Lubienski, Gulosino and Weitzel (2009), public school districts facing competitive pressures may respond like private organizations targeting potential consumers according to their hierarchical position in the market, rather than taking a more mission-driven approach of serving students in need.

In debates around the expansion of voucher programs, however, there is little discussion in the U.S. about data and research from large-scale and/or universal voucher policies implemented elsewhere in the world. Chile, for example, has one of the oldest large-scale, universal school voucher programs in the world, providing vouchers to all families and students in the country to choose to study at either public-municipal schools (public campuses administered by local municipalities) or private-voucher schools (private campuses that accept vouchers given by the state and that can be religious or non-religious and non-profit or for-profit). The existing system finances both school types based on their student enrollment and attendance throughout the year, giving the vouchers directly to public school districts (municipalities) or private campuses.

Considering that many proponents of the choice movement in the U.S. are persistently seeking the expansion of vouchers, the Chilean system is instructive for voucher debates in the U.S. (and elsewhere) due to its scale and scope. Since its creation in 1981, the system has grown steadily, increasing enrollment throughout the years to the point that, since 1990, 92% to 93% of students are included in the voucher system (only 7% to 8% of students attend private-paid independent schools that do not receive vouchers). Overall, the Chilean government has generated an expansion of student enrollment within the private-voucher sector from 33% in 1990 to 51% in 2009 at both primary and secondary schools (Larrañaga, Peirano & Falck, 2009a). In addition, there has been a 228% increase in the number of private-voucher schools from 2,425 in 1990 to 5,545 in 2009 (both primary and secondary levels), largely within urban areas and cities with more than 100,000 inhabitants.

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As a result, vouchers have resulted in steep enrollment losses in the public-municipal sector. Traditional public schools have seen a decrease in student enrollment from 59% in 1990 to 42% in 2009, particularly at the primary level. In addition, the overall number of public-municipal schools has decreased from 6,000 in 1990 to 5,811 in 2009. Vouchers have closed public schools in Chile, mainly at the primary level, and within urban areas (Larrañaga, Peirano & Falck, 2009a). In sum, the Chilean government has fashioned a voucher system that has created universal choice.

The Chilean case —especially Santiago, the Chilean capital city—  provides a useful “test case” for the impact of expanded vouchers on urban education in the U.S. and elsewhere. The main purpose of this research is to examine how Chilean municipalities have been affected by the threat of competition for students under the Chilean voucher system, and to test whether between-district stratification has been a relevant or irrelevant outcome of such pressures. More specifically, this study analyzes which key municipal factors (such as degree of private school competition within an area, municipal funds and resources available for education in a locality, socioeconomic demographics of municipalities and mean student achievement results for local public schools) are associated with municipal enrollment gains, retention or losses under the voucher system. Considering these goals, this study asks the following research question: What characteristics of urban municipalities in Chile constitute significant factors that are associated with attracting, maintaining, or losing public school students over time at the district level?

What did we find?

School choice promoters posit that vouchers will spur competition between public and private campuses, make schools more responsive to families and students, increase student achievement and improve effectiveness of all schools (Chubb & Moe, 1990; Friedman, 1962; Gallego, 2002; Gallego, 2004; Peterson, 2009; Sapelli & Vial, 2002). In addition, some researchers (e.g. Ladner & Brouillette, 2000) have pointed out that vouchers will prompt competition between school districts, and between districts and private schools, that will improve district effectiveness.

The data in this study show that, in the midst of a universal voucher system, the competition has been won by private-voucher schools, at the expense of public-municipal schools. In addition, the statistical analyses performed in this study shows that Chilean municipalities have not lost public school students in the same manner, as some have lost more students than others due to heterogeneity between districts. On the one hand, a high private-voucher penetration within a locality, an insufficient voucher received from the central government for paying education personnel wages, fixed costs and low mean student achievement results for local public schools are associated with public school enrollment losses at the local municipal level in Chile. On the other hand, a low private voucher penetration, sufficient voucher resources received from the central government and high mean student achievement results for local public schools are associated with public school enrollment gains or stability within a locality.

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Our findings are more complex concerning the relationship of municipal local poverty levels relative to public school enrollment. Despite the fact that low poverty areas are the localities that tend to retain more public school students on their campuses, high poverty areas are not the localities that tend to lose more public school students. Mid-high poverty areas and mid-low poverty areas, to a lesser degree, are the greater losers of public school enrollment. Why is this the case? First, the retention of students at low poverty and wealthier districts may relate to the high status and historical prestige they possess, along with the implementation of some practices that keep their local status untouched: The selection of the best students from the pool of applicants, the management of the number of students with behavioral problems they have, the expulsion of most conflictive students when necessary, and the investment in school infrastructure and appearance, etc. These practices are similar to the ones that most private-voucher schools put in practice and differ from the measures other public school districts are able to implement (Portales, 2012).

Second, high poverty districts are not the highest losers of public school enrollment under vouchers in Chile because their students appear unattractive to private providers or to municipalities in better-off areas. In addition, families of students in high-poverty districts do not have sufficient resources to pay for transportation costs or for the additional fees private-voucher schools usually charge. As a result, the students tend to remain studying in their public neighborhood schools and become “ghettoized” from the system (see Gewirtz, Ball and Bowe [1995] for similar findings under open school choice in England).

Finally, mid-high poverty municipalities and mid-low poverty areas— to a lesser degree— appear to be losing public school students the most. This finding may be related to the “higher spectrum of opportunities” students living in these areas will have to choose from— a specific campus or a set of schools— as compared the limited choices of students living in high-poverty districts. These higher opportunities may occur because families and students living in mixed income areas, who also have a relatively higher SES, are the ones that can access, pay for and/or get selected by either private-voucher schools or public schools in better-off areas. This is an important area for future research.

In sum, this study demonstrates that, in a market where the voucher is distributed equally and to everyone, the final result is a complex scenario of education stratification where differences and segregation primarily functions as an advantage for high-SES students. Prior peer-reviewed research on vouchers in Chile, and the current study, demonstrate that specific family and student characteristics, as well as, the family/student´s area of residence jointly determine the spectrum of educational choices available in a universal voucher system.

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Policy Implications

Considering previous elaborations, what can be learned from this study? What main policy implications unfold about the design, implementation and/or impact of large scale, universal school voucher plans, like the Chilean one? How could public education thrive in the context of increased education privatization? The first policy implication from this study is that the consideration of district level characteristics is relevant when analyzing the impact of large scale, universal school voucher plans. The impacts of vouchers not only vary depending on school, school sector, and public or private characteristics, but also on district attributes. For example, this study demonstrates that, within urban areas, the level of poverty of a municipality —or district- matters for retaining/attracting students to the locality in the context of open school choice. Similarly, the mean student performance of local public schools also affects a public district’s ability to retain/attract students. From a broader perspective, this implies that the analysis of the impacts of market mechanisms on an educational system and on public education needs to incorporate the district/municipal level along with other more traditional levels, such as the school and the school sector for an empirically, rather than ideologically, driven approach to vouchers.

A second policy implication from this research is that the claim of voucher supporters that school vouchers will prompt school competition —and district level competition— thereby increasing the overall effectiveness of the educational system is questionable. It appears to depend on how competition unfolds, if this outcome becomes more possible under vouchers than under a more traditional educational system. In the Chilean case, competition has certainly not increased such effectiveness. On one hand, previous research (Auguste & Valenzuela, 2004; McEwan & Carnoy, 2000; Gauri, 1998; Hseih and Urquiola, 2004; Hseih and Urquiola, 2006; Mizala & Romaguera, 2003) has demonstrated that increased overall student achievement has not been obtained as a result of the introduction of vouchers. On the other hand, this study shows that competition for students has not strengthened either the public or the private-voucher sector, but downgraded the public and benefited the private terms of enrollment. This outcome has been the result of how the Chilean voucher system functions.

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The third, and perhaps most important, policy implication from this study is that the design and implementation of a large scale, universal school voucher plan may imply various unintended negative effects on equity of education opportunity and the social integration of students within an education system. Such inequities not only operate between schools and school sectors, but also between districts. Chile has recognized the inequity for low-SES students as a problem in their market-based approach and, in 2008, passed the Preferential Subvention Law (PSL), changing the apportionment of the voucher. Prior to the PSL, the voucher amount was the same for all students. The new law created a larger voucher for high-poverty students. The data in the study are prior to the passage of the PSL. Future research is necessary to understand if the newly allotted amounts are enough for suppliers (schools) in the market to be interested in consumers (low-SES students). Thus, another question for future research is whether these newly allotted amounts balance the market in favor of low-SES students, particularly for those living in mid- high and high poverty areas. Whether the PSL has changed the attraction and retention of low-SES students is still an open question.

In 2014, after more than 30 years of vouchers, it appears that Chile may be headed toward a seachange in their educational policy. For the past several years, student protests and strikes have objected to the inequality resulting from voucher policy. Recently, Chilean Education Minister Nicolás Eyzaguirre has indicated that President Michelle Bachelet’s administration will propose an overhaul of the educational system that will end vouchers for private schools. However, it is currently unclear when and how these transformations are going to take place.

New field work examining the Chilean context and why policymakers after 30 years have decided to stop sending vouchers to private schools will commence in August. Thanks to the CI readers who crowd sourced the funding for the graduate student research team. I myself will not be able to go to Chile due to my impending move to California, but I will still lead in the production of materials from the trip. See Dear Cloaking Inequity Readers! Thank you!

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Citation: Portales, J. & Vazquez-Heilig, J. (2014) Understanding How Universal Vouchers Have Impacted Urban School Districts’ Enrollment in Chile. Education Policy Analysis Archives, 22(68). Retrieved from

For all of Cloaking Inequity’s posts on vouchers click here.

[i]Tax-credit voucher programs—dubbed “neovouchers” in a recent book by the University of Colorado’s Kevin Welner—provide a non-refundable tax credit to individuals or corporations contributing to non-profit corporations, which then distribute the money to students attending private schools.

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Julian Vasquez Heilig

Julian Vasquez Heilig is the Dean and a Professor of Educational Policy Studies and Evaluation at the University of Kentucky College of Education. His current res...