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A signalling model of school grades: centralized versus decentralized examinations

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  • Maria De Paola

    ()
    (Dipartimento di Economia e Statistica, Università della Calabria)

  • Vincenzo Scoppa

    ()
    (Dipartimento di Economia e Statistica, Università della Calabria)

Abstract

In this paper we examine the signalling value for skills of different examination systems in relation to errors that may affect grades obtained by students. We show that more precise evaluation systems, being associated to a higher reactivity of wages to school grades, induce an higher level of student effort. However, the effect is heterogeneous, low ability students tend to react less compared to high ability students. Moreover, from our analysis, it emerges that individuals endowed with low abilities may prefer less accurate evaluation systems. Nevertheless, when productivity increases the convenience of these systems reduces and the number of individuals preferring them shrinks. Our analysis highlights an important trade-off between centralized and decentralized evaluation systems. Frequent evaluations, typical of decentralized systems, reduce the impact on grades of errors that influence student performance and by this way diminish signal noise, on the other hand, different teachers generally adopt different performance assessment standards, and this tends to produce noisier evaluations. Conversely, centralized systems use common evaluation standards, but their frequency is limited by relevant administration costs and then produce evaluations that are more affected by errors influencing student performance. In the last part of the paper we investigate the relationship between the optimal class size and evaluation systems. We show that under decentralized evaluation systems class size also affects the signal noise. In fact, larger classes may reduce the frequency of evaluations undertaken by teachers.

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File URL: http://repec.business.uzh.ch/RePEc/iso/leadinghouse/0025_lhwpaper.pdf
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Bibliographic Info

Paper provided by University of Zurich, Institute for Strategy and Business Economics (ISU) in its series Economics of Education Working Paper Series with number 0025.

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Length: 19 pages
Date of creation: May 2008
Date of revision:
Handle: RePEc:iso:educat:0025

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Keywords: signalling modell; school grades;

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  1. Thomas S. Dee & Brian A. Jacob, 2006. "Do High School Exit Exams Influence Educational Attainment or Labor Market Performance?," NBER Working Papers 12199, National Bureau of Economic Research, Inc.
  2. Bishop, J., 1997. "The Effect of national Standards and Curriculum-Based Exams on Achievement," Papers 97-01, Cornell - Center for Advanced Human Resource Studies.
  3. Victor Lavy, 2004. "Performance Pay and Teachers' Effort, Productivity and Grading Ethics," NBER Working Papers 10622, National Bureau of Economic Research, Inc.
  4. Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 7-63, March.
  5. David N. Figlio & Lawrence S. Getzler, 2002. "Accountability , Ability and Disability: Gaming the System," NBER Working Papers 9307, National Bureau of Economic Research, Inc.
  6. John Bishop & Ludger Wossmann, 2004. "Institutional Effects in a Simple Model of Educational Production," Education Economics, Taylor & Francis Journals, vol. 12(1), pages 17-38.
  7. George Baker & Robert Gibbons & Kevin J. Murphy, 1993. "Subjective Performance Measures in Optimal Incentive Contracts," NBER Working Papers 4480, National Bureau of Economic Research, Inc.
  8. Bishop, John, 2006. "Drinking from the Fountain of Knowledge: Student Incentive to Study and Learn - Externalities, Information Problems and Peer Pressure," Handbook of the Economics of Education, Elsevier.
  9. Gianni De Fraja & Pedro Landeras, 2004. "Could do Better: The Effectiveness of Incentives and Competition in Schools," CEIS Research Paper 48, Tor Vergata University, CEIS.
  10. Bishop, John H. & Mane, Ferran, 2001. "The impacts of minimum competency exam graduation requirements on high school graduation, college attendance and early labor market success," Labour Economics, Elsevier, vol. 8(2), pages 203-222, May.
  11. Bishop, John H, 1997. "The Effect of National Standards and Curriculum-Based Exams on Achievement," American Economic Review, American Economic Association, vol. 87(2), pages 260-64, May.
  12. Glewwe, Paul & Kremer, Michael, 2006. "Schools, Teachers, and Education Outcomes in Developing Countries," Handbook of the Economics of Education, Elsevier.
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