School Diversification in Second-Best Education Markets

Abstract

According to theorists, choice and competition are intended to force schools to innovate and diversify their programs. However, evidence from several countries suggests that schools are not responding to competitive incentives as expected: (a) instead of innovating in the classroom, schools often embrace traditional practices; (b) innovations in administration tend to enable schools to more effectively shape their enrollment, rather than pursue more effective or diverse educational practices; and (c) public-sector policies, not competitive pressures, produced the most innovative and diversified options for families. The analysis considers the predominant theoretical perspective on organizational change, and points to difficulties in applying this reasoning to education. Instead, the article suggests a more complex understanding of market processes in education. The peculiar nature of public education as a “second-best” market corrupts the incentives intended by reforms that impose market-style competition on schools.