Evidence of neighborhood effects on educational performance in the chilean school voucher system

Abstract

This paper uses alternative measures of neighborhood quality to study its impact on student performance in school. The Chilean voucher-based education system allows us to test separately for neighborhood and traditional in-classroom peer effects, which have been traditionally emphasized by the literature. We use the Human Development Index reported by United Nations, and the relative number of books in public libraries at the county level, to measure neighborhood quality. We find that a 5 basis point increase in the HDI Index, is related to an increase of 1 to 4 points in the SIMCE test, depending on the specification. The effect is equivalent to half a year increase in mothers education (one additional year achieves a 7 point increase in SIMCE scores). Interestingly, the effect remains when we look at the sample of random movers.