ECON 151 Lecture Notes - Lecture 38: School Choice, Dependent And Independent Variables, School Voucher
22 Nov 2020
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Document Summary
Financing primary school in the us empirical testing of the tiebout model. School district boundaries were established in the 19th century; Streams (rivers) were often natural boundaries for the district; number of streams in a metropolitan area is thus correlated with the number of district in this area; Number of district in an area is a proxy for school competitions; Number of streams is a good instrument because: Independence : number of stream in a city does not impact schooling achievement; Relevance : number of stream is correlated with the herfindahl index i. e. with school choice. 0. 080 is significant b/c 0. 08/0. 04 = 2 which is greater than 1. 96 so significant. Means that when the number of streams increase by one unit, the index increases by 0. 08 units shows relationship between # of streams and index of competition. First stage measures the relevance of your iv.
