Seminarios

Abstract: 

Economic segregation is a widespread and persistent problem in US public schools. We argue that one potential cause of school segregation is the heterogeneity in student access to schooling options outside the public school system, e.g., private schools. We study an allocation problem in which students have common preferences for schools but differ in their outside options. We examine the set of ex ante Pareto efficient allocations. Ex ante Pareto efficiency underscores the tradeoff between (i) students' total assignment probabilities (to a school) and (ii) the utility that they obtain from schools (conditional on being assigned to a school). Students' marginal rates of substitution between these two quantities depend on their outside options.

The main qualitative property of efficient allocations is positive sorting. That is, students with higher outside options are assigned to better schools. Our positive sorting result is in contrast to those obtained in the literature, which typically relies on assumptions regarding the nature of the relationship between the preferences on the two sides of the market. We also revisit several empirical findings in the literature and argue that our rationale for school segregation is consistent with these results.

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