Inefficiency in School Consolidation Decisions

Author Name TANAKA Ryuichi (Faculty Fellow, RIETI) / Eric WEESE (University of Tokyo)
Creation Date/NO. January 2023 23-E-002
Research Project Microeconometric Analysis of Education Policy with Large Administrative Data
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We study school consolidation decisions and examine how the decisions are inefficient. First, we estimate willingness to accept (WTA) a school consolidation of the current school and an adjacent school and the determinants of WTA using an original survey. Then we examine the impact of actual school consolidations on the expenditure of municipalities to estimate the amount that the prefecture and municipality can save from such school consolidations. We find that much of the savings are due to class reductions, and about half the savings are at the prefectural level rather than the municipal level. The estimated WTA of and saving from school consolidations suggest a particular mechanism where the closure of schools could be delayed by inefficient decision-making due to the presence of fiscal externalities.