Supply-Side Responses in School Choice

This paper examines the competitive effects of the Indiana Choice Scholarship Program on public and participating private schools. Using a difference-in-differences design, we find that high exposure public schools witnessed increases in quality, driven by improvements in math. Initially poor performing public schools drive our results, suggesting that the public school quality gap shrank because of the program. Average quality at participating private schools fell following the program’s adoption. We also present suggestive evidence that high exposure participating private schools saw larger declines in quality. Policymakers should consider these indirect effects to understand vouchers’ total impact on educational outcomes.