The Effects of School Competition on Academic Achievement and Grading Standards

Nationwide school choice and fixed per-student governmental funding provide incentives for Dutch schools to perform well. Roughly one third of Dutch pre-university schools are of catholic denomination. Acknowledging this widely available outside option to public and other schools, this paper considers the effect of catholic competition on non-catholic school performance in pre-university education. Employing data from central exit exams, a positive link between competition intensity and academic achievement is found. In addition to raising achievement, higher levels of competition are not associated with a deterioration of grading standards. Finally, (inverse) quantile regression estimates show no evidence of schools at the bottom of the achievement distribution being hurt by competition.