The Exclusive Nature of Private Solutions to Public Problems: Evidence from (For-profit) US Charter Schools | WIP Seminar with Farzam Boroomand

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Abstract: The growing research on private solutions like CSR initiatives, non-profits, and public-private partnerships (PPPs) for addressing social issues has focused on the effectiveness of these private solutions for their direct recipients; however, the effect of these solutions on non-recipients is not well understood. This poses critical questions: Are these solutions inclusive, meaning do they serve vulnerable populations? What are their broader impacts on non-recipients? Do they generate broader positive impacts, or do they benefit recipients while disadvantaging non-recipients? These concerns are particularly pertinent when private solutions to social issues coexist with and compete against existing public solutions, potentially reducing the latter’s effectiveness. In this paper, I examine how private solutions to social issues might negatively impact existing public providers. First, private solutions could diminish support for public providers at the local level, leading to fewer resources raised for the public provider by local communities. Second, private providers, if profit-motivated, might serve more economically viable segments, leaving less viable ones to public providers, thereby increasing the latter’s production costs. I explore these mechanisms in the context of US public education, where charter schools (private provider) coexist and compete with traditional public schools (public provider). I find that the entry of charter schools, particularly for-profit ones, reduces local support for traditional public schools (TPS), as evidenced by decreased per-pupil local revenues and fewer successful school referenda for additional funding. Furthermore, using a quasi-natural experiment, I demonstrate that TPS grades exposed to for-profit charter schools see an increase in the proportion of economically disadvantaged and disabled students. I also show that these effects are mostly mitigated if the private provider is organized as a non-profit or if safeguards are put in place to prevent exclusionary behaviors by for-profit private providers.

Bio: Farzam Boroomand is a Ph.D. candidate in Strategic Management and Entrepreneurship at the Carlson School of Management, University of Minnesota. Broadly, his interest lies in understanding the competition between and comparative efficiency of different organizational forms in solving societal grand challenges. His dissertation studies various forms of organizing in the US public education system, including for-profit and non-profit private organizations, local public organizations, and community-based self-organizing collectives, for the provision of inclusive, equitable, and quality education (SDG4).

Our CIRHR Work-In-Progress Seminar series allows members of our community to discuss early-stage research. Future guest speakers include:
 

• October 23, Shawn Meikle, CIRHR PhD Student
   
• November 20, Xiner Xu, UofT Economics PhD Student
   
• December 4, Dikla Yogev, CIRHR Post-Doc