When Federal Express came along, the U.S. Postal Service was forced to lower its costs and offer new services. But schools, conventional wisdom says, are not like hamburger joints, grocery stores or small-package transport firms. Competition can only hurt them, the theory goes, because it means they will lose their best students and the money that follows those kids.

One of the most aggressive attackers of that theory is Caroline Minter Hoxby. The Harvard University economist has found that public schools respond to competition - whether it be from other public schools or vouchers.

Her research has its detractors, but it has received considerable notice. That's partly because it focused on public schools in Milwaukee, home to the nation's oldest and largest publicly funded voucher program.

It's also because her findings, to many, were counterintuitive: In Milwaukee, the public schools that faced the greatest competition from vouchers actually showed the greatest jump in test scores.

But that jump did not occur until after the 1998-99 school year when the Milwaukee program, free of court challenges, raised the amount of its vouchers to $5,500 and raised the cap on the number of children from 1 percent of the public school population to 15 percent. More private schools got involved in the program, and new private schools sprouted up.

"People were willing to start schools for $5,500," Minter Hoxby said in an interview during a recent visit to Cleveland. "That's when the Milwaukee public schools said, 'We need to do something.' "

Minter Hoxby found that that in public schools where two-thirds or more of the students were eligible for vouchers, test scores rose faster than at those schools where fewer children qualified.

Not everyone in Milwaukee, of course, attributes the gains to vouchers. Bob Peterson is a fifth-grade teacher at the city's Fratney Street School and has been active in school reform efforts for two decades. He believes a variety of factors is responsible for test-score increases, at his school and others. "Teachers do not live and die based on competition from a voucher school down the street," he said. "They want their kids to do well. What annoys me about this argument is the idea that what motivates teachers is the marketplace. That just isn't the case."

Peterson acknowledges that vouchers did spark two changes in Milwaukee. First, the district began offering full-day kindergarten for 4-year-olds after a number of voucher schools gave parents that option. Also, the district started aggressively advertising its schools to parents.
School choice advocates point to those kinds of improvements as an indication that public school districts - if not individual schools - know they no longer have a monopoly on education. That's a good thing, said Frederick Hess, a researcher with the American Enterprise Institute in Washington, D.C. He told a school-choice conference in April that change won't occur until public school educators worry about their jobs.
"Competition is fundamentally about fear," Hess said.