Does private schooling affect international test scores? Evidence from a natural experiment

The effects of private schooling on Programme for International Student Assessment (PISA) scores of 63 countries across the globe from 2000 to 2012 are estimated. I employ year and country fixed effects regression models and use the short-run demand for schooling within a country and year as an instrument to predict private share of schooling enrollment. I find evidence to suggest that an increased share of 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 1 percentage point increase in the private share of schooling enrollment is associated with a 1.4-point increase in math scores and a 1.1-point increase in reading scores. However, only the reading result remains statistically significant in the instrumental variables analysis.