Diversity and education choices

This dissertation explores the role that demographic diversity plays in school choice decisions and on public school funding levels and sources. In the first essay, a model is described in which heterogeneous individuals choose between a publicly funded school and a private alternative. An equilibrium is established in which individuals sort based on both income and the type of education they prefer. Numerical simulations which vary the type preference distribution show that both the equilibrium tax rate and the public expenditure per student exhibit a non-monotonic relationship with the degree of preference diversity. To empirically test these results, the second essay explores the relationship between local public school expenditures and four different types of demographic diversity. Using data from Texas school districts, the results indicate that local public education revenues are negatively related to diversity of the educational attainment of adults in the district and are positively related to language diversity. In addition, the relationship between local education funding and language diversity depends upon whether competition from private and charter schools exists. The final essay investigates the role that race plays in individual school choice decisions. Data from sixteen Texas schools indicate that the racial composition of the available schools will impact school choice decisions. Specifically, individuals exhibit a preference to attend schools with high proportions of students of their own race, all other things being equal. Additionally, both Hispanic and white individuals exhibit a preference to attend schools with low proportions of black students, all other things equal.