Does Private Schooling Improve International Test Scores? Evidence from a Natural Experiment

I estimate the effect of private schooling on Program for International Student Assessment (PISA) scores of 62 countries across the globe from 2000 to 2012. I employ time and country-fixed effects regression models and also use the short-run demand for schooling within a country and year as an instrument for private share of schooling enrollment. I find evidence to suggest that increased private schooling leads to improved PISA scores around the world. Specifically, the model using control variables alongside country and year fixed effects finds that a one percentage point increase in the private share of schooling enrollment is associated with a 1.6-point increase in math scores and a 1.2-point increase in reading scores. However, only one of the two relationships remains statistically significant in the instrumental variables analysis.