Education Market Design in the Presence of Peer Effects: Theory and Evidence From South Korea
(with Sam Hwang)
Education markets frequently experience rationing due to the limited role prices play, making market design—particularly admission rules—crucial for clearing these markets. However, it is often overlooked that student preferences are endogenous to market design, primarily due to its influence on peer composition. We incorporate peer preferences into our model to examine notable differences in admission rules between private/elite schools and public schools. In many countries, private/elite schools admit students earlier than public schools—a process we call Sequential Admissions (SA)—and typically employ academic screening criteria, unlike public schools. We theoretically analyze equilibria in admissions complicated by peer effects and estimate a structural model using detailed high school application data from Seoul. Our results reveal that high-performing students prefer to coordinate with other high-performing peers, a coordination facilitated by academically selective private/elite schools. However, we find that academic screening exacerbates welfare inequality between high-performing students and others, while it does not have significant impact on average welfare.
Education Reform and Behavioral Response: Evidence From South Korea
(with Sejin Ahn and Sam Hwang) (under revision)
We study an education reform resulting in delayed ability tracking for South Korean students during the 1960s-70s. The reform ended a practice of sorting students into elite and non-elite middle schools via admission exams, postponing ability tracking until the high school level. A discontinuity in the probability of students’ facing admission exams based on a birth-date cutoff enabled us to identify the causal effect of the reform on short- and long-run outcomes. We find that the reform increased both the incidence of private tutoring as well as hourly wages amongst students from wealthy households. A causal mediation analysis shows that private tutoring is an important pathway for the effect of the reform on university graduation and hourly wage. Our findings suggest that education reforms can interact with household behavior to yield unintended policy outcomes, especially in developing countries with well-established private tutoring markets.
When Does the Boston Mechanism Benefit Students Without Outside Options? (under review) [SSRN link]
I study when students without outside options ex ante prefer Boston Mechanism (BM) to Deferred Acceptance (DA) for public school choice, given that others have outside options (e.g., private schools). Everyone prefers BM independently of the preference distribution if and only if the outside option is preferred only to ``not popular'' public schools. I then use a three-school model to analyse the case where the outside option is ranked above some ``popular'' schools. Students who are marginal in deciding which school to report as their top choice under BM prefer DA, whereas inframarginal students prefer BM. I provide sufficient conditions on the heterogeneity of preferences that guarantee the existence of students who prefer BM. Under a uniform preference distribution, the share of students who strictly prefer BM among those without outside options is equal to the proportion of students without outside options among participants in the public school market.
Work in progress:
How does heterogeneity in beliefs affect students in the Boston mechanism? (with Sam Hwang) (revised version coming soon)
Retailer Self-Preferencing When Consumers Learn by Searching (with Joshua Higbee)
Joint Child Custody and the Mobility of Men (with Abi Adams, Thomas Jorgensen, Hamish Low and Alessandra Voena)
Why is Dating Exclusive? Signaling, Mimicking Behavior, and the Impact of Dating Technologies (with Bintou Ball) (draft coming soon)