The unintended effects of private school competition

We examine whether competition from private schools improves public school performance and expenditure. It is difficult methodologically to isolate the effect of competition, but we use new measures of competition in both the public and the private school sector and a data set comprising detailed background information on more than 35,000 public school students in the Danish voucher system. This design provides a relatively firm support for the conclusion that competition does not improve achievement of public school students but that it increases public expenditure per student. Finally, we argue that there may be several good reasons for this.