I have believed for a while now that an important reason that suburban public schools outperform urban public schools is that suburban public schools have to keep the parents happier because of the competition from private schools. That is, in a rich suburban neighborhood, you get excellent public school, partly because the parents are rich enough to send their kids to private schools if the public schools perform poorly. In the inner city, the parents are poor and the private school alternative is not much of a threat.
I’ve never seen any formal evidence on this. One way to test it would be to look at inner cities that have strong private Catholic schools which usually find a way to take kids, poor or not, and see if that improves the quality of the public schools.
Competition is powerful. When you have alternatives, it forces people to treat you better than they otherwise would, as a customer, as a worker, in business, in education, in love and life, generally.
I was thinking about this while listening to this episode  of This American Life , an extraordinary podcast that always inspires me to try and make EconTalk  better. (If you want to hear why I think TAL is so phenomenal, listen to Act V  You can listen to it for free. Download is 95 cents.)
The episode was a retrospective on Harold Washington, the first black mayor of Chicago who was elected shortly after the end of the Richard J. Daley era, the era when the Democratic machine with all its patronage and corruption was in its heyday, or at least one of its heydays.
The show describes how horribly the Daley Machine treated blacks even though blacks voted overwhelmingly for Daley. The show describes all the racist stuff Daley did in the way he allocated contracts, handed out patronage jobs, used federal funds to keep blacks in black neighborhoods and so on. One black alderman recounts feeling like "The Garbage Alderman" because he spent so much time getting the city just to pick up the garbage in black neighborhoods.
But of course that’s the way it was. The blacks had no alternatives. They couldn’t vote Republican. So you get the seeming ironic result that one of the most loyal voting blocs received virtually none of the swag from the system. They had no alternatives. Daley didn’t have to be nice to them. He knew they’d vote for him anyway, especially in the general election. Just another delightful aspect of democracy’s bluntness as a tool for self-expression.
The other tragicomic part of the story is that it appears that Washington, once elected, didn’t use the spoils system to disproportionately reward blacks, black neighborhoods, black contractors. Some of his followers, expecting more of a bonanza, saw this as "undemocratic" and the show essentially takes it as a given that the Irish mayor gives the Irish goodies, the Italian mayor gives the Italians goodies, etc. That’s America but there’s a double standard for blacks. And that Harold Washington conformed to that standard and simply treated blacks equally, which was a huge improvement over Daley.
I don’t know if any of that is true, The tragicomic part is implicit and sometimes explicit thinking that municipal government is about the spoils rather than doing something that makes the city run well.