Do parents hold schools accountable for their performance? Evidence from enrollment decisions after a quality revealing intervention in Indonesia

Abstract

School choice is expected to improve school quality if parents choose schools for their children based on school performance. The idea is that schools need to satisfy parent demands in order to attract enough students to avoid school closure. I test whether parents’ school preferences respond to changes in exam scores, an important signal of school performance for parents, using unique preference data from centralized school admission systems in several districts. I exploit a computer-based testing intervention that made exam scores better reflect actual school quality and that resulted in large changes in the scores. I also test whether school closure is a credible threat. This requires better-performing schools to have enough capacity for students that no longer want to go to the low-performing schools.