Regulating Publicly Funded Private Schools : A Literature Review on Equity and Effectiveness

Abstract

As school choice is an increasingly common feature of OECD education systems, the regulation of publicly funded private schools has become a salient concern for researchers and policy makers alike. Focussing on three areas of regulation – selective admission, add-on tuition fees and for-profit ownership – this paper provides a review of the theoretical and empirical literature concerning their effects on equity and educational effectiveness. It also offers an overview of different countries’ approaches to the funding of private education and the methodological challenges involved in their empirical evaluation. The available evidence confirms that the funding of private schools has yielded widely different results across educational systems and suggests that regulatory frameworks are an important factor shaping these outcomes. Selective admission and substantial add-on tuition fees in particular are likely to exacerbate social segregation and can undermine schools’ incentives to compete on the basis of educational quality. The evidence on subsidised for-profit schools is equally divergent across countries but evidence points to the importance of rigorous accreditation processes and clear conditions concerning selectivity and fees to guide allocation of public funds. Although important questions are yet to be conclusively addressed, including the interaction of different regulatory devices and their effect on specific student groups, the existing literature suggests that private school regulation can make an important contribution to the equity and effectiveness of school choice programmes.