Purchasing Seats for High School Admission and Inequality

81 Pages Posted: 12 May 2020 Last revised: 9 Dec 2021

See all articles by Congyi Zhou

Congyi Zhou

New York University

Tong Wang

Waseda University

Date Written: January 21, 2021

Abstract

Many Chinese cities once gave students the option of paying higher tuition to attend their preferred schools. This seat-purchasing mechanism is neither strategy-proof nor stable. Our paper combines administrative and survey data to estimate students' preferences and conduct welfare analysis. We find that changing from a deferred acceptance mechanism to the so-called cadet-optimal stable mechanism reduces students' welfare but that adopting the observed seat-purchasing mechanism alleviates this welfare loss. Under the latter approach, upper-tier schools collect significantly more tuition --- with a minimal change in student quality --- whereas collecting more tuition results in middle-tier schools facing substantial uncertainty about student quality.

Keywords: Market Design, School Choice, High School Admission, Matching with Contracts

JEL Classification: D40, I20

Suggested Citation

Zhou, Congyi and Wang, Tong, Purchasing Seats for High School Admission and Inequality (January 21, 2021). Available at SSRN: https://ssrn.com/abstract=3579819 or http://dx.doi.org/10.2139/ssrn.3579819

Congyi Zhou (Contact Author)

New York University ( email )

19 West 4th Street - 2nd floor
New York, NY 10012
United States
2129988500 (Phone)

Tong Wang

Waseda University ( email )

1-104 Totsukamachi, Shinjuku-ku
tokyo, 169-8050
Japan

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