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Markets and School Quality

Recent research makes clear that many factors affecting education outcomes have nothing to do with whether schools are public or private. So it makes sense to consider how to combine the virtues of both systems, instead of simply choosing between them.

SANTIAGO – Around the world, private schools are booming, especially in developing countries. The Economist reports that in 2010, there were an estimated one million private schools in the developing world, and the figure has since risen quickly. From Latin America to Africa and South Asia, private schools have been moving into communities – mostly poor – where the state has been slow to provide services.

This trend has proven controversial. The marriage of education and markets attracts three main criticisms. The first focuses on distributive justice: if everything – including education – is for sale, those who have more money will buy more of it. Inequality in knowledge (and therefore income) in one generation will be transmitted to the next, perhaps in amplified form.

This is an important concern, especially given the increasingly skewed income distribution in developed countries. But economists have long understood that the distribution of wealth, as John Stuart Mill put it in his Principles of Political Economy, is “a matter of human institution solely.” In other words, market-based production is one thing; distribution is quite another, and it can be influenced by policy.

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