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Self-selection in the state school system

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With diminishing returns to the peer group, it is optimal social policy to mix chldren in schools. We consider what happens when, contrary to the outcome being determined by a social planner, schools and children are free to seek each other out: with some caveats, this leads to perfect segregation by child quality. It is shown that this is the worst possible outcome. We show also that a competitive system produces the optimal allocation of children to schools.

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en

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application/pdf

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http://eprints.lse.ac.uk/20645/1/Self-Selection_in_The_State_School_System.pdf

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