September, 2015

Exit, Voice, and Incentives: An Institutional Analysis of Urban Public School Districts

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Albert Hirschman coined the terms “exit” and “voice” to describe the ways that citizens can effect change in government institutions. In the realm of public education, families can either voice their opinion to local public schools and school boards or choose to exit to alternative school districts or private schools. This paper examines the effects of gradual changes in urban public education over the last century—increases in spending and school district consolidation— on the mechanisms of voice and exit. I argue that the growth of the public system has transformed the knowledge and incentives of individuals, thus altering the ways they utilize both voice and exit; and this has ultimately had significant welfare implications.