School choice with independent versus consolidated districts

TL;DR

This paper evaluates the welfare impacts of consolidating school districts in Hungary, showing significant benefits for most students, especially those from smaller districts, by analyzing preference data and stable matching outcomes.

Contribution

It introduces a method to estimate complete preference rankings from incomplete data and assesses welfare effects of district consolidation using real-world Hungarian data.

Findings

73% of students benefit from consolidation

Fewer than 3% are assigned to less preferred schools

Students from smaller districts benefit more

Abstract

This paper studies the welfare effects of school district consolidation. Using incomplete rank-ordered lists (ROLs) submitted for admission to the Hungarian secondary school system, we estimate complete ROLs assuming that parents do not use dominated strategies and that the matching outcome is stable. These estimates aid in constructing a counterfactual district-based assignment and discerning the factors driving parents' preferences over schools. We find that district consolidation leads to large welfare gains in Budapest, equivalent to students attending a school five kilometres closer to their residences. These gains offset the additional travel distances incurred in the consolidated assignment. 73\% of matched students benefit from district consolidation, while fewer than 3\% are assigned to a less preferred school. Students from smaller and less under-demanded districts benefit relatively more, as well as those with high academic ability. Using reported preferences instead of estimated ones also yields large gains from district consolidation.