Research

Education Market Design in the Presence of Peer Effects: Theory and Evidence From South Korea

(with Sam Hwang)

Schools can also differentiate by peer composition among other aspects. Different rules elite or private schools are subject to compared to public schools have been heavily debated because of their effects on student distribution. In many countries former group admit students earlier than the latter, which we call Sequential Admissions (SA). Furthermore, the former group can use academic criteria in admissions unlike the latter. We study the effect of these admission aspects on welfare and distribution. Our analysis has important distinguishing features. First, it includes private schools as well as public schools, whereas previous studies on admission rules focused on centralized public school allocation. Second, students can have preferences for peer composition at schools. This is an important factor that can determine sorting behavior. First we theoretically study equilibria of the admission games complicated by the peer effects. Then we estimate a structural model using detailed high school applications data from Seoul to run counterfactual simulations. We show that SA can approximate centralized admission schemes well. This is important since complete centralization is known to increase welfare but hard to implement in many cases. Regarding admission criteria, we show that use of academic criteria in a subset of schools increases the desirability of these schools. The reason is that high performing students want to coordinate to study together and academic screening provides this. This suggest that, school choice is also a coordination game, not just an object allocation problem.

Education Reform and Behavioral Response: Evidence From South Korea

(with Sejin Ahn and Sam Hwang) (under revision)

We study an education reform resulting in delayed ability tracking for South Korean students during the 1960s-70s. The reform ended a practice of sorting students into elite and non-elite middle schools via admission exams, postponing ability tracking until the high school level. A discontinuity in the probability of students’ facing admission exams based on a birth-date cutoff enabled us to identify the causal effect of the reform on short- and long-run outcomes. We find that the reform increased both the incidence of private tutoring as well as hourly wages amongst students from wealthy households. A causal mediation analysis shows that private tutoring is an important pathway for the effect of the reform on university graduation and hourly wage. Our findings suggest that education reforms can interact with household behavior to yield unintended policy outcomes, especially in developing countries with well-established private tutoring markets.

When Does the Boston Mechanism Benefit Students Without Outside Options?

I study when students without outside options ex ante prefer Boston Mechanism (BM) to Deferred Acceptance (DA) for public school choice, given that others have outside options (e.g., private schools). Everyone prefers BM independently of the preference distribution if and only if the outside option is preferred only to ``not popular'' public schools. I then use a three-school model to analyse the case where the outside option is ranked above some ``popular'' schools. Students who are marginal in deciding which school to report as their top choice under BM prefer DA, whereas inframarginal students prefer BM. I provide sufficient conditions on the heterogeneity of preferences that guarantee the existence of students who prefer BM. Under a uniform preference distribution, the share of students who strictly prefer BM among those without outside options is equal to the proportion of students without outside options among participants in the public school market.

Work in progress:

How does heterogeneity in beliefs affect students in the Boston mechanism? (with Sam Hwang) (revised version coming soon)