IDEAS home Printed from https://ideas.repec.org/p/yor/yorken/02-11.html
   My bibliography  Save this paper

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

Author

Listed:
  • Gianni De Fraja
  • Pedro Landeras

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 their effort affects the students' educational attainment. We show that increasing the power of the incentive scheme and the effectiveness of competition may have the counterintuitive effect of lowering the students' attainment. In a simple dynamic set-up, where the reputation of the schools affects recruitment, and we show that increased competition leads to segregation of pupils by ability.

Suggested Citation

  • Gianni De Fraja & Pedro Landeras, "undated". "Could Do Better: The Effectiveness of Incentives and Competition in Schools," Discussion Papers 02/11, Department of Economics, University of York.
    • Handle: RePEc:yor:yorken:02/11
    as

    Download full text from publisher

    File URL: https://www.york.ac.uk/media/economics/documents/discussionpapers/2002/0211.pdf
    File Function: Main text
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Steve Gibbons & Stephen Machin, 2001. "Valuing Primary Schools," CEE Discussion Papers 0015, Centre for the Economics of Education, LSE.
    2. De Fraja, Gianni & Iossa, Elisabetta, 2002. "Competition among Universities and the Emergence of the Elite Institution," Bulletin of Economic Research, Wiley Blackwell, vol. 54(3), pages 275-293, July.
    3. Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 7-63, March.
    4. 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.
    5. Dee, Thomas S., 1998. "Competition and the quality of public schools," Economics of Education Review, Elsevier, vol. 17(4), pages 419-427, October.
    6. Arnott, Richard & Rowse, John, 1987. "Peer group effects and educational attainment," Journal of Public Economics, Elsevier, vol. 32(3), pages 287-305, April.
    7. 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.
    8. Hanushek, Eric A, 1992. "The Trade-Off between Child Quantity and Quality," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 84-117, February.
    9. Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, December.
    10. Ballou, Dale, 2001. "Pay for performance in public and private schools," Economics of Education Review, Elsevier, vol. 20(1), pages 51-61, February.
    11. Paul Glewwe & Nauman Ilias & Michael Kremer, 2010. "Teacher Incentives," American Economic Journal: Applied Economics, American Economic Association, vol. 2(3), pages 205-227, July.
    12. 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.
    13. Gordon C. Winston, 1999. "Subsidies, Hierarchy and Peers: The Awkward Economics of Higher Education," Journal of Economic Perspectives, American Economic Association, vol. 13(1), pages 13-36, Winter.
    14. Lorraine Dearden & Javier Ferri & Costas Meghir, 2002. "The Effect Of School Quality On Educational Attainment And Wages," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 1-20, February.
    15. 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 231-250, May.
    16. Gianni De Fraja & Tania Oliveira & Luisa Zanchi, 2010. "Must Try Harder: Evaluating the Role of Effort in Educational Attainment," The Review of Economics and Statistics, MIT Press, vol. 92(3), pages 577-597, August.
    17. Kingdon, Geeta Gandhi & Teal, Francis, 2007. "Does performance related pay for teachers improve student performance? Some evidence from India," Economics of Education Review, Elsevier, vol. 26(4), pages 473-486, August.
    18. Summers, Anita A & Wolfe, Barbara L, 1977. "Do Schools Make a Difference?," American Economic Review, American Economic Association, vol. 67(4), pages 639-652, September.
    19. de Bartolome, Charles A M, 1990. "Equilibrium and Inefficiency in a Community Model with Peer Group Effects," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 110-133, February.
    20. 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.
    21. 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.
    22. 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.
    23. Caroline M. Hoxby, 2000. "Does Competition among Public Schools Benefit Students and Taxpayers?," American Economic Review, American Economic Association, vol. 90(5), pages 1209-1238, December.
    24. Holger Sieg & Dennis Epple & Richard Romano, 2003. "Peer effects, financial aid and selection of students into colleges and universities: an empirical analysis," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(5), pages 501-525.
    25. Rothschild, Michael & White, Lawrence J, 1995. "The Analytics of the Pricing of Higher Education and Other Services in Which the Customers Are Inputs," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 573-586, June.
    26. Ron W Zimmer & Eugenia F Toma, 2000. "Peer effects in private and public schools across countries," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 19(1), pages 75-92.
    27. Caroline Minter Hoxby, 1994. "Do Private Schools Provide Competition for Public Schools?," NBER Working Papers 4978, National Bureau of Economic Research, Inc.
    28. Eric A. Hanushek & Steven G. Rivkin, 2003. "Does Public School Competition Affect Teacher Quality?," NBER Chapters, in: The Economics of School Choice, pages 23-48, National Bureau of Economic Research, Inc.
    29. 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 1141-1177, September.
    30. Gibbons, Steve & Machin, Stephen, 2003. "Valuing English primary schools," Journal of Urban Economics, Elsevier, vol. 53(2), pages 197-219, March.
    31. McMillan, Robert, 2004. "Competition, incentives, and public school productivity," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1871-1892, August.
    32. 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, Wiley Blackwell, vol. 54(3), pages 295-314, July.
    33. Chang-Tai Hsieh & Miguel Urquiola, 2002. "When Schools Compete, How Do They Compete? An Assessment of Chile's Nationwide School Voucher Program," Working Papers 123, Princeton University, Department of Economics, Center for Economic Policy Studies..
    34. 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.
    35. Gerard R. Butters, 1977. "Equilibrium Distributions of Sales and Advertising Prices," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 44(3), pages 465-491.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gianni De Fraja & Tania Oliveira & Luisa Zanchi, 2010. "Must Try Harder: Evaluating the Role of Effort in Educational Attainment," The Review of Economics and Statistics, MIT Press, vol. 92(3), pages 577-597, August.
    2. Dennis N. Epple & Richard Romano, 2003. "Neighborhood Schools, Choice, and the Distribution of Educational Benefits," NBER Chapters, in: The Economics of School Choice, pages 227-286, National Bureau of Economic Research, Inc.
    3. Epple, Dennis & Figlio, David & Romano, Richard, 2004. "Competition between private and public schools: testing stratification and pricing predictions," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1215-1245, July.
    4. Millimet, Daniel L. & Rangaprasad, Vasudha, 2007. "Strategic competition amongst public schools," Regional Science and Urban Economics, Elsevier, vol. 37(2), pages 199-219, March.
    5. Jean-Michel Plassard & Nhu Tran Thi Thanh, 2009. "Liberté de choix des élèves et concurrence des établissements : un survey de l'analyse du pilotage des systèmes éducatifs par les quasi-marchés," Revue d'économie industrielle, De Boeck Université, vol. 0(2), pages 99-130.
    6. Vandenberghe, Vincent, 1999. "Cost Efficiency and Feasibility of Education Policy in the Presence of Local Social Externalities," LIDAM Discussion Papers IRES 1999021, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    7. Millimet, Daniel L. & Collier, Trevor, 2008. "Efficiency in public schools: Does competition matter?," Journal of Econometrics, Elsevier, vol. 145(1-2), pages 134-157, July.
    8. O'Shaughnessy, Terry, 2007. "Parental choice and school quality when peer and scale effects matter," Economics of Education Review, Elsevier, vol. 26(4), pages 501-515, August.
    9. David Brasington & Don Haurin, 2005. "Capitalization of Parent, School, and Peer Group Components of School Quality into House Price," Departmental Working Papers 2005-04, Department of Economics, Louisiana State University.
    10. Marisa Hidalgo-Hidalgo, 2007. "On the optimal allocation of students when peer effect works: Tracking vs Mixing," Working Papers 07.14, Universidad Pablo de Olavide, Department of Economics.
    11. Robert J. Gary-Bobo & Alain Trannoy, 2005. "Efficient Tuition & Fees, Examinations, and Subsidies," IDEP Working Papers 0501, Institut d'economie publique (IDEP), Marseille, France, revised 01 Mar 2005.
    12. Fernández, Raquel, 2001. "Sorting, Education and Inequality," CEPR Discussion Papers 3020, C.E.P.R. Discussion Papers.
    13. Stephen Gibbons & Stephen Machin & Olmo Silva, 2008. "Choice, Competition, and Pupil Achievement," Journal of the European Economic Association, MIT Press, vol. 6(4), pages 912-947, June.
    14. Felipe Barrera-Osorio & Dario Maldonado & Catherine Rodríguez, 2012. "Calidad de la educación básica y media en Colombia: diagnóstico y propuestas," Documentos de Trabajo 10078, Universidad del Rosario.
    15. Lefgren, Lars, 2004. "Educational peer effects and the Chicago public schools," Journal of Urban Economics, Elsevier, vol. 56(2), pages 169-191, September.
    16. Emiliana Vegas & Ilana Umansky, 2005. "Improving Teaching and Learning through Effective Incentives : What Can We Learn from Education Reforms in Latin America?," World Bank Publications - Reports 8694, The World Bank Group.
    17. López-Torres, Laura & Johnes, Jill & Elliott, Caroline & Polo, Cristina, 2021. "The effects of competition and collaboration on efficiency in the UK independent school sector," Economic Modelling, Elsevier, vol. 96(C), pages 40-53.
    18. Marisa Hidalgo, 2005. "Peer Group Effects And Optimal Education System," Working Papers. Serie AD 2005-12, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    19. Thomas J. Nechyba, 1999. "A Model of Multiple Districts and Private Schools: The Role of Mobility, Targeting, and Private School Vouchers," NBER Working Papers 7239, National Bureau of Economic Research, Inc.
    20. Jacob M. Markman & Eric A. Hanushek & John F. Kain & Steven G. Rivkin, 2003. "Does peer ability affect student achievement?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(5), pages 527-544.

    More about this item

    Keywords

    students effort; schools quality; incentives in education; competition between schools; quasi-markets.;
    All these keywords.

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:yor:yorken:02/11. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Paul Hodgson (email available below). General contact details of provider: https://edirc.repec.org/data/deyoruk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.