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Could do Better: The Effectiveness of Incentives and Competition in Schools

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Author Info
Gianni De Fraja () (University of York (UK) - Department of Economics, Centre for Economic Policy Research (CEPR))
Pedro Landeras (University of Cantabria - Department of Economics)

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Abstract

This paper studies the effects of incentive mechanisms and of the competitive environment on the interaction between schools and students, in a set-up where the students' educational attainment depends on their peer group, on their effort, and on the quality of the school's teaching. We show that increasing the power of the incentive scheme and the effectiveness of competition may have the counterintuitive effect of lowering the students' effort, with ambiguous effects on their attainment. In a simple dynamic set-up, where the reputation of the schools affects recruitment, we show that increased competition leads to segregation of pupils by ability.

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Publisher Info
Paper provided by Tor Vergata University, CEIS in its series CEIS Research Paper with number 48.

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Length: 26
Date of creation: 18 Feb 2004
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Handle: RePEc:rtv:ceisrp:48

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Postal: CEIS - Centre for Economic and International Studies - Faculty of Economics - University of Rome "Tor Vergata" - Via Columbia, 2 00133 Roma
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Related research
Keywords: Students effort; Schools quality; Peer-group effect; Incentives;

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Find related papers by JEL classification:
I20 - Health, Education, and Welfare - - Education - - - General
H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Betts, Julian R, 1995. "Does School Quality Matter? Evidence from the National Longitudinal Survey of Youth," The Review of Economics and Statistics, MIT Press, vol. 77(2), pages 231-50, May. [Downloadable!] (restricted)
  2. Arnott, Richard & Rowse, John, 1987. "Peer group effects and educational attainment," Journal of Public Economics, Elsevier, vol. 32(3), pages 287-305, April. [Downloadable!] (restricted)
    Other versions:
  3. Correa, Hector & Gruver, Gene W., 1987. "Teacher-student interaction: A game theoretic extension of the economic theory of education," Mathematical Social Sciences, Elsevier, vol. 13(1), pages 19-47, February. [Downloadable!] (restricted)
  4. Steve Gibbons & Stephen Machin, 2001. "Valuing Primary Schools," CEE Discussion Papers 0015, Centre for the Economics of Education, LSE. [Downloadable!]
  5. De Fraja, Gianni & Iossa, Elisabetta, 2002. "Competition among Universities and the Emergence of the Elite Institution," Bulletin of Economic Research, Blackwell Publishing, vol. 54(3), pages 275-93, July.
  6. James Heckman & Anne Layne-Farrar & Petra Todd, 1995. "Does Measured School Quality Really Matter? An Examination of the Earnings-Quality Relationship," NBER Working Papers 5274, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 7-63, March. [Downloadable!] (restricted)
  8. Bradley, Steve & Taylor, Jim, 2002. "The Effect of the Quasi-market on the Efficiency-Equity Trade-Off in the Secondary School Sector," Bulletin of Economic Research, Blackwell Publishing, vol. 54(3), pages 295-314, July.
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  9. Borland, Melvin V. & Howsen, Roy M, 1992. "Student academic achievement and the degree of market concentration in education," Economics of Education Review, Elsevier, vol. 11(1), pages 31-39, March. [Downloadable!] (restricted)
  10. Summers, Anita A & Wolfe, Barbara L, 1977. "Do Schools Make a Difference?," American Economic Review, American Economic Association, vol. 67(4), pages 639-52, September. [Downloadable!] (restricted)
  11. Dee, Thomas S., 1998. "Competition and the quality of public schools," Economics of Education Review, Elsevier, vol. 17(4), pages 419-427, October. [Downloadable!] (restricted)
  12. Victor Lavy, 2002. "Evaluating the Effect of Teachers' Group Performance Incentives on Pupil Achievement," Journal of Political Economy, University of Chicago Press, vol. 110(6), pages 1286-1317, December. [Downloadable!] (restricted)
  13. Lorraine Dearden & Javier Ferri & Costas Meghir, 2000. "The effect of school quality on educational attainment and wages," IFS Working Papers W00/22, Institute for Fiscal Studies. [Downloadable!]
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  14. Bradley, Steve & Johnes, Geraint & Millington, Jim, 2001. "The effect of competition on the efficiency of secondary schools in England," European Journal of Operational Research, Elsevier, vol. 135(3), pages 545-568, December. [Downloadable!] (restricted)
  15. Caroline Minter Hoxby, 1994. "Do Private Schools Provide Competition for Public Schools?," NBER Working Papers 4978, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  16. Henderson, Vernon & Mieszkowski, Peter & Sauvageau, Yvon, 1978. "Peer group effects and educational production functions," Journal of Public Economics, Elsevier, vol. 10(1), pages 97-106, August. [Downloadable!] (restricted)
  17. Hanushek, Eric A, 1986. "The Economics of Schooling: Production and Efficiency in Public Schools," Journal of Economic Literature, American Economic Association, vol. 24(3), pages 1141-77, September. [Downloadable!] (restricted)
  18. Epple, Dennis & Romano, Richard E, 1998. "Competition between Private and Public Schools, Vouchers, and Peer-Group Effects," American Economic Review, American Economic Association, vol. 88(1), pages 33-62, March. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Brekke, Kurt Richard & Cellini, Roberto & Siciliani, Luigi & Straume, Odd Rune, 2008. "Competition and Quality in Regulated Markets: a Differential-Game Approach," CEPR Discussion Papers 6801, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  2. Maria De Paola & Vincenzo Scoppa, 2008. "A signalling model of school grades: centralized versus decentralized examinations," Economics of Education Working Paper Series 0025, University of Zurich, Institute for Strategy and Business Economics (ISU). [Downloadable!]
    Other versions:
  3. Giorgio Brunello & Lorenzo Rocco, 2007. "Educational standards in private and public schools," "Marco Fanno" Working Papers 0043, Dipartimento di Scienze Economiche "Marco Fanno". [Downloadable!]
    Other versions:
  4. M. De Paola & V. Scoppa, 2007. "Returns to skills, incentives to study and optimal educational standards," Journal of Economics, Springer, vol. 92(3), pages 229-262, December. [Downloadable!] (restricted)
  5. Steve Bradley & Jim Taylor, 2008. "Diversity, choice and the quasi-market: An empirical analysis of secondary education policy in England," Working Papers 005802, Lancaster University Management School, Economics Department. [Downloadable!]
  6. Jaag, Christian, 2006. "School Competition," MPRA Paper 339, University Library of Munich, Germany. [Downloadable!]
  7. Dario Maldonado, 2008. "A model of school behavior: Tuition fees and grading standards," DOCUMENTOS DE TRABAJO 005106, UNIVERSIDAD DEL ROSARIO - FACULTAD DE ECONOMÍA. [Downloadable!]
  8. Brekke, Kurt Richard & Cellini, Roberto & Siciliani, Luigi & Straume, Odd Rune, 2008. "Competition and quality in regulated markets with sluggish demand," CEPR Discussion Papers 6938, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  9. De Fraja, Gianni & Oliveira, Tania & Zanchi, Luisa, 2005. "Must Try Harder. Evaluating the Role of Effort in Educational Attainment," CEPR Discussion Papers 5048, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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