Full text of Chicago Fed Letter : Private Schools and School Enrollment in Chicago, No. 231

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ESSAYS ON ISSUES

THE FEDERAL RESERVE BANK
OF CHICAGO

OCTOBER 2006
NUMBER 231

Chicago Fed Letter
Private schools and school enrollment in Chicago
by William Sander, professor of economics, DePaul University, and consultant, Federal Reserve Bank of Chicago

Does enrollment in private school increase educational attainment? After reviewing
some research on national trends concerning private (versus public) schooling, the
author examines how private school options in the Chicago metropolitan area might
affect academic achievement for various demographic groups.

1. Private high school share, by city
City size
rank
1
2
3
4
5
6
7
8
9
10

City

Private
(percent)

New York
Los Angeles
Chicago
Houston
Philadelphia
Phoenix
San Diego
Dallas
San Antonio
Detroit

18
11
17
8
21
7
7
10
8
8

SOURCE: U.S. Census Bureau, 2003, 2000 Decennial
Census of Population and Housing, Washington, DC.

Although the private share in basic education in Chicago has been declining,
partly as a result of Catholic school closings, Chicago still educates a relatively
high percentage of its children in private
schools. In 2000, the City of Chicago
ranked third among the ten largest cities
in the United States in the percentage
of high school students attending private
schools, behind Philadelphia and New
York City (figure 1). Chicago ranked
seventh out of the 50 largest cities. About
two out of three private school students
in Chicago attend Catholic schools. At
the national level, about one out of ten
students attend private grade schools
and high schools. About half of this population is enrolled in Catholic schools.
Over time, the private share in education
has remained at about 10%, although
the Catholic share of this population
was much higher in the past—about
90% in 1960.

to choose private schooling. In this
Chicago Fed Letter, I review some of the
academic evidence on private schooling
and educational achievement. I also examine private schooling in the Chicago
metropolitan area and its possible effect
on school enrollment. For the purposes
of this article, the Chicago metropolitan
area is defined as the City of Chicago and
suburbs of Chicago within Illinois (called
the Chicago Primary Metropolitan Statistical Area by the U.S. Census Bureau).

One of the important issues in economic
research and education policy is whether private schools increase academic
achievement. The payoffs to educational
attainment have been high and rising
along a number of dimensions, including lifetime earnings and health. Accordingly, there have been many recent
policy initiatives to enhance educational
attainment through reform and financing of U.S. schools, including bolstering the ability of low-income families

To address whether private schooling
produces superior educational outcomes, it is necessary to understand what
determines the decision to attend private
schools. For example, some of the reasons that families choose private schools,
other than the schools’ performance
per se, may also affect educational outcomes. And so, an understanding of
the private–public school choice will
help distinguish the possible causes of
educational outcomes.

Literature: A thumbnail sketch

Most of the studies on private schools
have focused on Catholic schools. One
reason for this is that Catholic schools
have accounted for the largest share of
the private school sector. Existing data
sets are often too small to estimate the
effects of other types of private schools,
such as Jewish schools or independent
nonsectarian schools.1

Since the Coleman
studies, many researchers have examined
City of Chicago
Suburbs of Chicago
the effects of private
Age
White Black Hispanic
White Black Hispanic
( - - - - - - - - - - - - - - - - - - percent - - - - - - - - - - - - - - - - - - )
schooling, trying to
control for unob12
48
8
10
15
8
7
13
45
12
12
15
9
9
served selectivity in
14
46
8
10
13
8
6
the private school
15
49
9
16
13
6
6
sector. An important
16
44
8
17
11
7
9
17
51
9
16
12
6
8
study of this type by
18
59
11
23
19
11
8
Derek Neal at the
SOURCE: U.S. Census Bureau, 2003, 2000 Decennial Census of Population and Housing,
University of Chicago
Washington, DC.
found that after controlling for selectivity,
Some of the factors that have been
Catholic schools had a large positive
found to affect private school atteneffect on high school graduation rates
dance are as follows. Catholic religion for minorities (blacks and Hispanics)
and Catholic religiosity as measured
in inner cities.3 For non-Hispanic whites,
by church attendance have large efNeal found no Catholic school effect
fects on Catholic school attendance.
in suburban areas and a modest posiEvangelical Protestants are also more
tive effect in inner cities. In a previous
likely to send their children to private study, I also found a large positive
schools. In general, families with stron- Catholic school effect on educational
ger religious views are more likely to
attainment for minorities in inner citopt for faith-based schools. Religious
ies and no effect for whites in suburschools account for over 80% of the en- ban areas.4
rollment in private schools nationwide.
Studies have also tried to find and meaEconomic variables, including family
sure any effects that private schools
income and parents’ education, usually
exert on the quality of public schools
increase the probability of attending
through competitive pressures. A review
private schools, while private school
of many of these studies suggests that
tuition has a negative effect. The quality
competition has a small positive effect
of public schools in proximity to the
on the quality of public education.5
home has also been shown to be an imHarvard economist Caroline Hoxby
portant factor: The demand for private
has been one of the leading exponents
schools is higher where the quality of
of the view that private schools improve
public education is lower. Further, studthe quality of public schools through
ies show some evidence of “white flight”
competitive pressures.6
to private schools as the percentage of
blacks in public schools increases.
Evidence from Chicago
2. Private school enrollment, by demographics

Influential studies on the effects of
Catholic and other private schooling
were published by Coleman, Hoffer,
and Kilgore in 1982 and Coleman and
Hoffer in 1987.2 These studies indicated
that Catholic schools increased academic
achievement and educational attainment
for those enrolled in them. However,
the studies were controversial because
they did not adequately control for the
possibility that Catholic school effects
were driven by unobserved variables,
including those things that often determine the selection of private schools,
such as ability of students and family
values (e.g., the religiosity of parents).

What are the private school options
available in Chicago, and how can we
draw on existing data to throw additional
light on the possibility that private school
options might affect educational attainment? Recent data have been compiled
from the 5% Public Use Micro-data
Sample (PUMS) from the 2000 Decennial
Census of Population and Housing. The
PUMS data are derived from samples
of areas (called Public Use Micro-data
Areas, or PUMAs) that have a population
of at least 100,000. Figure 2 shows these
data on private school enrollment, by
age, race, ethnicity, and location, in the
Chicago metropolitan area. The data

indicate that roughly half of non-Hispanic
whites in the City of Chicago attend
private schools. This is not the case in
suburban areas where private school
enrollment rates are about 15% for 12
and 13 year olds and about 11% or 12%
for high school students. Private school
enrollment rates generally increase for
18 year olds in both the City of Chicago
and the suburban areas because part of
this group has started college. Of the
whites enrolled in Catholic schools in
the Archdiocese of Chicago, almost all
(95%) are Catholic.
For blacks in the City of Chicago, private
school enrollment rates range from 8%
to 12%; rates are slightly lower in suburban areas for blacks. One of the reasons
for lower enrollment rates for blacks in
private schools is that private schools in
the Chicago area are mostly Catholic,
while blacks are mostly Protestant. Of
the blacks enrolled in Catholic schools
in the Archdiocese of Chicago, three
out of four are not Catholic.
For Hispanics in the City of Chicago, private school enrollment rates range from
about 10% to 12% for the youngest ages
and increase to about 16% or 17% for
high school students; rates in the suburbs
are less than 10% for Hispanics regardless of age. Almost all of the Hispanics
who are enrolled in Catholic schools
are Catholic.
Data on school enrollment rates, by age,
race, ethnicity, and location, are presented in figure 3. The data indicate that
98% to 99% of non-Hispanic whites are
enrolled in school in both the City of
Chicago and suburbs of Chicago from
the ages of 12 through 16. For 17 year
olds, enrollment rates for whites decline by 5 percentage points in the City
of Chicago and 3 percentage points in
suburban areas.
Among blacks, 98% to 99% are enrolled
in school through the age of 15. Thereafter, enrollment rates decline to about
90% at age 17 in the City of Chicago
and 93% in the suburbs of Chicago. Enrollment rates fall off more dramatically for blacks at age 18 relative to whites
in both the City of Chicago and the
suburban areas.

dropout rate of 5.4%
by a very modest 0.3
percentage points. It
City of Chicago
Suburbs of Chicago
was also found that
Age
White Black Hispanic
White Black Hispanic
( - - - - - - - - - - - - - - - - - percent - - - - - - - - - - - - - - - - - - )
males and Hispanics
were more likely to
12
99
99
99
99
99
97
13
99
99
97
99
99
98
drop out, while re14
98
98
98
99
99
96
spondents from more
15
99
98
95
99
99
95
affluent and highly
16
98
97
86
98
96
86
17
93
90
78
95
93
76
educated households
18
82
63
61
80
67
51
were less likely to drop
out of school. For nonS OURCE: U.S. Census Bureau, 2003, 2000 Decennial Census of Population and Housing,
Washington, DC.
Hispanic white respondents, the percentage
attending
private
schools did not affect
Although Hispanic enrollment rates are
the
dropout
rate
of
2.6%.
slightly less than white and black enrollment rates at younger ages, they start to
The results for blacks and Hispanics both
fall off more dramatically after age 15. By
indicated a more substantial negative
the age of 17, over 20% of Hispanics are
relationship between the percentage
not enrolled in school in the City of
attending private schools and the dropChicago and almost 25% are not enrolled
out rate. For blacks, a one standard deviin the suburbs of Chicago. Enrollment
ation increase in the percentage of blacks
rates for Hispanics are about the same as
in private schools (about 3 percentage
for blacks at age 18 in the City of Chicago;
points) would reduce the dropout rate
only one in two Hispanics are enrolled in
of 5.7% by about one-sixth. Another
school at age 18 in the Chicago suburbs.
way to look at this relationship is that if
blacks attended private schools at about
Statistical estimates
the same rate as non-Hispanic whites
I conducted statistical (probit) estimates
in the metropolitan area, private schools
of the probability that respondents age
would be associated with reducing the
15–17 were not enrolled in school (called
black dropout rate by about one-half.
the dropout rate). This procedure allows
For Hispanics, the negative relationone to test whether private schools might
ship between private school enrollment
have a significant effect on school enin an area and the dropout rate was
rollment rates in the Chicago region
even more substantial. A one standard
after controls are made for other backdeviation increase in the percentage
ground factors. The private school variof Hispanics attending private schools
able is defined as the percentage of
(about 5 percentage points) would be
grade school and high school students
associated with reducing the dropout
in the area in which they live (PUMA)
rate of 13.3% to about 10.8%.
that attended a private grade school or
high school in 2000. The additional
Conclusion
adjustments that are made to estimate
Although the vast majority of students
dropout rates include household income,
in suburban schools graduate from high
the householder’s (parent’s or guardschool, with a high percentage going on
ian’s) education, whether the responto college, this is not the case in the City
dent lived in a married-couple household,
of Chicago. In a recent study, the fourgender, age, race/ethnicity (black and
year high school graduation rate in pubHispanic), whether the sample area was
lic schools in Chicago was estimated at
in the City of Chicago, and average houseonly 54%.7 Although the high school
hold income in the sample area. Estimates
graduation rate is low in many large cities
were undertaken for all teens age 15–17
in the United States, the rate in Chicago
and by race and ethnic background.
is lower than in many other large cities.
For example, in a study of the largest
For all respondents, a one standard deviation increase in the percentage attend- public school districts in the United
States, the 2001–02 graduation rate was
ing private schools would reduce the
3. School enrollment, by demographics

estimated at 51% for Chicago, while it
was 66% for New York City and 59%
for Philadelphia.8
Apart from whether private schools increase test scores, they have been shown
to be successful in keeping students in
school. For example, data from the
Catholic Archdiocese of Chicago indicate that 97% of students in Catholic
schools, which disproportionately serve
low-income minority students, graduate
from high school. Data from the 2000
Decennial Census of Population and Housing
that have been analyzed here and other
studies suggest that private schools in
the Chicago metropolitan area probably
increase school enrollment rates for black
and Hispanic students of high school
age, thus increasing the probability that
they will graduate from high school.
Over time, the percentage of students
attending private schools in Chicago
has declined. This is partly a result of
the decline in the number of Catholic
schools. Over the past 30 years, the number of Catholic schools in Chicago has
declined by about 50%. Student enrollment in these schools has declined even
more—from about 132,000 in 1976–77
to about 52,000 in 2004–05.9 Since 1990,
the percentage of students attending

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Senior Vice President and Director of Research; Douglas
Evanoff, Vice President, financial studies; Jonas Fisher,
Economic Advisor and Team Leader, macroeconomic
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policy research; William Testa, Vice President, regional
programs and Economics Editor; Helen O’D. Koshy,
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Chicago Fed Letter is published monthly by the
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private schools in Chicago has declined
from about one in five to approximately
one in six. One of the possibilities this
raises is that fewer students might be
completing high school than would be

the case if more students had access to
private schools, especially students from
black and Hispanic backgrounds. An
additional outcome of this decline is

that the cost of public education has
increased more than would otherwise
be the case as more students have been
absorbed into public schools.

1

4

William Sander, 2001, Catholic Schools: Private
and Social Effects, Norwell, MA: Kluwer
Academic Publishers.

7

5

Clive R. Belfield and Henry M. Levin, 2001,
“The effects of competition on educational
outcomes: A review of U.S. evidence,”
Columbia University, Teachers College,
National Center for the Study of Privatization in Education, working paper, No. 35,
available at www.ncspe.org/list-papers.php.

Elaine Allensworth, 2005, Graduation and
Dropout Trends in Chicago: A Look at Cohorts
of Students from 1991 through 2004, University
of Chicago, Consortium on Chicago School
Research, report, January, available at
www.consortium-chicago.org/publications/
pdfs/p75.pdf.

8

Jeffrey Sable and Lee M. Hoffman, 2005,
Characteristics of the 100 Largest Public Elementary and Secondary School Districts in the
United States: 2002–03, U.S. Department of
Education, Institute of Education Sciences,
National Center for Education Statistics,
report, August, available at http://
nces.ed.gov/pubs2005/2005312.pdf.

9

Loyola University Chicago, Institute of Urban
Life, 1990, Chicago’s Private Elementary and
Secondary Schools, report; and Archdiocese
of Chicago, Office of Catholic Schools,
2005, Annual Report, Chicago.

2

3

A recent phenomenon has been the growth
of hybrid public–private schools, often
called charter schools. These schools are
typically “chartered” by public entities and
paid for with public monies, but they resemble private schools in that they are less
bound in their organizational structure
by rules and regulations.
James S. Coleman, Thomas Hoffer, and
Sally Kilgore, 1982, High School Achievement:
Public, Catholic, and Private Schools Compared,
New York: Basic Books; and James S.
Coleman and Thomas Hoffer, 1987, Public and Private High Schools: The Impact of
Communities, New York: Basic Books.
Derek Neal, 1997, “The effects of Catholic
secondary schooling on educational attainment,” Journal of Labor Economics, Vol. 15,
pp. 98–123.

6

Caroline Minter Hoxby, 1994, “Do private
schools provide competition for public
schools?,” National Bureau of Economic
Research, working paper, No. 4978, December; and Caroline Minter Hoxby, 1996, “The
effects of private school vouchers on schools
and students,” in Holding Schools Accountable,
Helen F. Ladd (ed.), Washington, DC:
Brookings Institution Press.