Chinese College Admissions and School Choice Reforms : A Theoretical Analysis ∗
We model household choice of schools under the Boston mechanism (BM) and develop a new method, applicable to a broad class of mechanisms, to fully solve the choice problem even if it is infeasible via the traditional method. We estimate the joint distribution of household preferences and sophistication types using administrative data from Barcelona. Counterfactual policy analyses show that a change from BM to the Deferred Acceptance mechanism would create more losers than winners and decrease average welfare by 1,020 euros, while a change to the top trading cycles mechanism increases average welfare by 460 euros. ∗We thank Yuseob Lee for excellent research assistance. We thank the editor and five anonymous referees for their suggestions. We thank the staff at IDESCAT, especially Miquel Delgado, for their help in processing the data. We thank Steven Durlauf, Jeremy Fox, Amit Gandhi, John Kennan and Chris Taber for insightful discussions. We thank participants at the Cowles conference, Barcelona GSE summer forum and ASSA 2016, and workshop participants at ASU, Rice, Royal Holloway, Virginia Tech, UChicago and UCL for helpful comments. The authors acknowledge support from a grant from the Institute for New Economic Thinking for the Human Capital and Economic Opportunity Global Working Group. The views expressed in this paper are those of the authors and not necessarily those of the funders or persons named here. Calsamiglia acknowledges support from the European Research Council through the ERC Grant 638893, and the the Spanish Ministry of Science and Innovation (ECO2014-53051-P), the Generalitat de Catalunya (2014 SGR 515), and Severo Ochoa. Güell acknowledges support from the Spanish Ministry of Science and Innovation (ECO2011-28965). All errors are ours. †CEMFI and Barcelona GSE. ‡Corresponding author: Chao Fu, University of Wisconsin-Madison. firstname.lastname@example.org. §University of Edinburgh, CEP(LSE), CEPR, FEDEA, & IZA.