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Cost Savings from Pupil Migration to Private Schools

20 Pages Posted: 9 Nov 2007  

Cotton Lindsay

Clemson University - John E. Walker Department of Economics

Alex Grecu

Clemson University - John E. Walker Department of Economics

Date Written: 2006

Abstract

Considerable disagreement exists over the magnitude of potential savings to public school boards associated with the migration of public school students to independent schools in connection with voucher or tax credit plans being considered by many states in the US. This paper argues that the appropriate measure of any such savings is the marginal cost of a student. Using three year's worth of school level data for South Carolina, a cost function for a school is estimated. We find that though some costs are fixed, variable costs comprise about 80 percent of school costs. Moreover, variable costs are very sensitive to changes in enrollment. When estimated in first differences on year-to-year changes, the hypothesis that these costs vary in strict proportionality to enrollment cannot be rejected at generally accepted levels of confidence. We find that these potential savings lie in the range of $4,000 to $5,000 per student. Costs are estimated separately for elementary, middle and high schools as well as for disabled, gifted and regular students.

Keywords: Pupil Marginal Cost, Cost Savings, Public Schools, Pubilc School Migration

JEL Classification: I22, D00, D20

Suggested Citation

Lindsay, Cotton and Grecu, Alex, Cost Savings from Pupil Migration to Private Schools (2006). Available at SSRN: https://ssrn.com/abstract=1027763 or http://dx.doi.org/10.2139/ssrn.1027763

Cotton Lindsay

Clemson University - John E. Walker Department of Economics ( email )

Clemson, SC 29634
United States

Alex Grecu (Contact Author)

Clemson University - John E. Walker Department of Economics ( email )

Clemson, SC 29634
United States

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