Does private education pay off?

Abstract Education plays a crucial role in promoting innovation, entrepreneurship, and equal opportunities in society, acting as a “social elevator.” However, an inequitable educational system can perpetuate inequalities, leading to significant social consequences. This paper examines two mechanisms through which schooling systems may generate or reinforce inequalities: private schooling and school composition. Earlier studies often suggested that private schooling, particularly government-dependent private schools, had a positive impact on student achievement. However, more recent research has challenged this view, highlighting the importance of contextual factors such as school composition and socio-economic background. Building on these findings, our analysis explores how the advantages attributed to private schools are shaped by the demographic profiles of their students. Using data from the OECD Program for International Student Assessment (PISA) 2015 and employing an education production function, we assess the effects of private schooling and school composition on student performance. Our findings contribute to the growing body of research questioning the comparative advantage of private schools, demonstrating that their perceived superiority often arises from the socio-economic advantages of the students they enroll, rather than the quality of education provided. The study also reveals significant variations across countries, underscoring the urgent need to address the segregation issues linked to private school networks.