1. The effect of school quality on school choice Evidence from secondary education in Hungary
Carla Haelermans (Maastricht University, the Netherlands)
Zoltán Hermann (Institute of Economics, Budapest, Hungary)
Thomas Wouters (KU Leuven, Belgium)

2. Research questions Does school quality affect school choice?
Do parents pay attention to the level of the school, or to added value?
Does this effect depend on family background? Do more educated parents give more weight to school quality? 2

3. Motivation Many countries have a system of school choice
Parents and/or students choose school (often based on some constraints (distance, grades, etc.)
Increased school choice is assumed to increase school quality through compeittion
Equality of opportunity
Low EOp when disadvantaged students end up in lower quality schools

4. Previous literature
Evidence on determinants of school choice (Hastings et al, Burgess et al) indicates the following determinants:
School quality in performance
School denomination (religion/church schools)
Educational philosophy / profile
Distance to home/work
School composition (ethnic/SES)
Teachers
Information on school quality
Information on odds of admission

5. Motivation and contribution
Application data (instead of realised choices)
Not directly affected by schools’ decisions
Hungarian case: high stake decision
Rank-ordered logistic regression
School choice in upper secondary instead of primary education
Focus on quality
Level versus added value (the role of perception)
Heterogeneity

6. Upper secondary education in Hungary12
Vocational
school
Vocational secondary track
Academic track 11 10 9 8
General school
(Primary and lower secondary education) 7 6 5 4 3 2 1

7. School admission system in Hungary
1. Students apply to programs
Choice of educational programs within schools and tracks
Students rank these programs
2. Schools rank students
Decision on a cutoff entry score
Priority for higher scores
3. Centralised matching algorithm
No incentive for strategic ranking of schools
Non-matched students have to find a school in a second round (not observed)

8. Data Administrative data for a single cohort: 2006
Matched data from three datasets (~75% of students)
Secondary School Application Register
Students’ ranked applications
National Assesment of Basic Competences
Achievement: math and reading test scores in grade
Other individual characteristics, including family
background
Travel time data
Public transportation, ZIP-code level

9. Estimation: rank-ordered logit

10. Estimation: rank-ordered logit

11. Issues before estimation
Estimating school quality and the level of the school
Defining feasible choice sets 11

12. Measuring school quality and level
Quality: value-added model
A10i,s = β1 A8i,s+ β2 (A8i,s)2 + β3 (A8i,s)3 + δXi,s + θs + εi,s
A: student test score in grade 8,10
X: gender, SEN, parental education, number of books
θs : school quality
random effects, shrinkage estimator
Level: school mean of grade 8 scores 12

13. Creating feasible choice sets
Application list: schools chosen by the student
Application list + schools chosen by similar students, within feasible travel time
(Application list + all schools within feasible travel time)
Travel time: minutes
Further restrictions:
only schools in tracks chosen by the student
gender composition
50 general rule, 90 maximum

14. Creating feasible choice sets
Similar students: overlap in 1-3. applications
Student X
Student Y
school
track 1. A
Voc.sec. E
academic 2. B F 3. C
Voc. 4. D G 5. H 14

15. Creating feasible choice sets
Similar students: overlap in 1-3. applications
Student X
Student Y
school
track 1. A
Voc.sec. E
academic 2. B F 3. C
Voc. 4. D G - 5. H 15

16. Results (actual list) all tracks academic vocational secondary
all tracks
academic
vocational secondary
vocational school
log travel time
0.0267**
*** ** **
(0.0124)
(0.0203)
(0.0172)
(0.0240)
quality
0.179***
0.472***
0.0392
(0.0381)
(0.0950)
(0.0616)
(0.0783)
level
1.441***
1.486***
1.844***
1.964***
(0.0275)
(0.0611)
(0.0440)
(0.100)
Notes: Controls: log settlement size of the school, church- and other private school dummies.
Standard errors are clustered at the grade 8 school level.

17. Results (actual list) all tracks academic vocational secondary
all tracks
academic
vocational secondary
vocational school
log travel time
0.0252**
*** ** **
(0.0124)
(0.0203)
(0.0173)
(0.0241)
quality
0.149***
0.582***
(0.0522)
(0.199)
(0.0895)
(0.0917)
level
1.326***
1.086***
1.643***
1.953***
(0.0363)
(0.112)
(0.0646)
(0.117)
parental educ.
upper sec. x quality
0.0378
-0.159
0.0462
(0.0725)
(0.223)
(0.122)
(0.169)
tertiary x quality
0.115
-0.137
0.594**
(0.0896)
(0.224)
(0.165)
(0.285)
upper sec. x level
0.152***
0.451***
0.258***
0.117
(0.0454)
(0.127)
(0.0847)
(0.209)
tertiary x level
0.192***
0.495***
0.427***
-0.103
(0.0582)
(0.109)
(0.341)
Notes: Controls: log settlement size of the school, church- and other private school dummies.
Standard errors are clustered at the grade 8 school level.

18. Results (feasible choice set)
all tracks
academic
vocational secondary
vocational school
log travel time
-0.575***
-0.777***
-0.515***
-0.361***
(0.0123)
(0.0208)
(0.0149)
(0.0153)
quality
-0.128***
0.157**
0.158***
-0.127**
(0.0300)
(0.0758)
(0.0438)
(0.0567)
level
0.0829***
0.0325
0.268***
0.709***
(0.0148)
(0.0305)
(0.0248)
(0.0379)
Notes: Controls: log settlement size of the school, church- and other private school dummies.
Standard errors are clustered at the grade 8 school level.

19. Results (feasible choice set)
all tracks
academic
vocational secondary
vocational school
log travel time
-0.577***
-0.775***
-0.517***
-0.362***
(0.0125)
(0.0211)
(0.0151)
(0.0154)
quality
-0.319***
-0.195*
-0.268***
(0.0372)
(0.108)
(0.0588)
(0.0638)
level
-0.231***
-0.528***
-0.206***
0.623***
(0.0165)
(0.0379)
(0.0324)
(0.0423)
parental educ.
upper sec. x quality
0.352***
0.406***
0.254***
0.439***
(0.0441)
(0.0648)
(0.0856)
tertiary x quality
0.425***
0.348**
0.333***
0.679***
(0.0653)
(0.136)
(0.0867)
(0.145)
upper sec. x level
0.260***
0.369***
0.572***
0.295***
(0.0192)
(0.0395)
(0.0341)
(0.0591)
tertiary x level
0.657***
0.926***
1.066***
0.316***
(0.0284)
(0.0506)
(0.0458)
(0.0944)
Notes: Controls: log settlement size of the school, church- and other private school dummies.
Standard errors are clustered at the grade 8 school level.

20. Conclusions
School quality matters, but school level is at least as important
Both quality and level matter more for highly educated parents
Relative to quality, school level becomes more important in the lower tracks
Heterogeneity ito parental background in preferences for quality only surfaces in feasible choice sets