Files
Abstract
Competition in educational markets has long been argued as a driver for improving schools' educational quality. However, schools also compete by implementing selective admission processes, known as screening, competing to attract the best pool of students while avoiding disadvantaged ones. This paper studies the prevalence of these school-side selection mechanisms in a school choice system, their direct impact on students through changes in assignments, and their spillover effects through changes in classroom composition. Using rich administrative data from Chile, we document strong evidence of school-side selection in publicly subsidized private schools, explaining up to 20 percent of their performance gap compared to public schools. Leveraging centralized admission lotteries to simulate counterfactual distributions at individual and classroom levels, we then estimate the impact of screening on students' academic performance, college enrollment, and behavioral outcomes. While we document the value-added benefits of attending selective schools, these effects are of equal magnitude on traditionally accepted and rejected students. These findings oppose school-student fit as the primary driver for screening. In contrast, we find support for sizable peer effects in classrooms that received lottery-induced shocks to their class composition, potentially explaining schools' implementation of screening practices.