Applying the theory of yardstick competition to the schooling system, we show that it is optimal to have central tests of student achievement and to engage in benchmarking because it raises the quality of teaching. This is true even if teachers’ pay (defined in monetary terms) is not performance related. If teachers value reputation, and if teaching output is measured so that it becomes comparable, teachers will increase their effort. The theory is tested using the German PISA-E data. Use is made of the fact that central exams exist in some federal states of Germany but not in all. The empirical evidence suggests that central exams have a positive effect on the quality of teaching.
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Paper provided by Mannheim Research Institute for the Economics of Aging (MEA), University of Mannheim in its series MEA discussion paper series with number
05091.
Length: Date of creation: 30 Jun 2005 Date of revision: Handle: RePEc:mea:meawpa:05091
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Find related papers by JEL classification: I28 - Health, Education, and Welfare - - Education - - - Government Policy
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.:
Paul Glewwe & Nauman Ilias & Michael Kremer, 2003.
"Teacher Incentives,"
NBER Working Papers
9671, National Bureau of Economic Research, Inc.
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