1. The Effectiveness of Franchises and Independent Private Schools in Chile’s National Voucher Program Comments

2. Most of the work in Chile has used dichotomous categories: public & private  “ideological noise” into the public discussion in education The private sector is heterogeneous: franchise schools, religious and not religious, for profit/not for profit, etc. The work compares a heterogeneous private voucher sector with a “homogeneous” public school sector But: is it really homogeneous? District (public) Private Voucher Private Non-voucher “Industry related” 53.9%37.8%7.6%0.7% 11,296 schools (2004) Comment 1: On the comparison sector

3. Chile has 341 municipalities: 3/4 of them have less than 50,000 inhabitants; 2/3 (214) has less than 25,000 and 27 municipalities have less than 3,000 inhabitants The average number of student per public school is 379; while in the municipalities with less than 25,000 inhabitants the average is around 184 while in the municipalities with more than 100,000 inhabitants the average is 780 students per public school The average transfer from own municipal budget is 10%, while in the municipalities with less than 25,000 inhabitants the average transfer is 12% and 8% in the ones with more than 100,000 inhabitants

4. This means that many municipalities operates with a school population which limits the possibilities for an efficient scale of operation As the paper recognizes, there is a need to compare the effectiveness of smaller and larger public school districts (in may well be that in large and rich districts they may work as franchises). I will encourage the authors to include this into the analysis This is important as a policy of “association” of small districts has been recommended in the past for some analyst in Chile

5. Comment 2: Doubts It is very important to model how franchises are generated. It may be the case, as the paper suggests in the conclusions, that the higher performing schools are the ones that are more likely to establish franchises (or to join a franchise) than low quality schools. This issue need to be addressed as it may change the interpretation of the results I have doubts whether the number of schools in a franchise is a good proxy to scale of operations. I think, scale of operations is more related to the number of students rather than the number of schools in a franchise [“previous life” work suggest that per student cost of a “model school” varies by school size]

6. Comment 3: Empirical Strategy # 1 Not incorporating into the analysis the private non-voucher schools may bias the analysis and the authors framework (two-stage selection bias with multiple choices) can be accommodated easily to incorporate increases in the choice set of schools This issue is relevant as many private voucher schools are more likely to use share financing in elementary education (public elementary schools can’t opt for this system) District (public) Private Voucher Private Non-voucher “Industry related” 53.9%37.8%7.6%0.7%

7. Comment 3: Empirical Strategy # 2 Why the student achievement equation does not depend on school “supply” characteristics (e.g. student-teacher ratio, the presence in the school of some MINEDUC targeted program)? Why the indirect utility of families for the school choices equation does not depend on school “supply” characteristics? Why are they risk neutral?

8. Comment 4 I would suggest to include also in Tables 4 and 5 the “predicted” differences together with the predicted achievement of the average public school student in the jth school category. This is: I know that in Chile Catholic schools outperform public schools and other private schools. Therefore, not controlling for this school characteristic my confound the effect of attending a private franchise with the Catholic school effect. It is stated: “The results … do not change the substantial findings of our previous analysis”. What do you mean?

9. Thanks