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On Policies To Reward The Value Added By Educators

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  • John Cawley
  • James Heckman
  • Edward Vytlacil

Abstract

One current educational reform seeks to reward the "value added" by teachers and schools based on the average change in pupil test scores over time. In this paper, we outline the conditions under which the average change in scores is sufficient to rank schools in terms of value added. A key condition is that socioeconomic outcomes be a linear function of test scores. Absent this condition, one can still derive the optimal value-added policy if one knows the relationship between test scores and socioeconomic outcomes, and the distribution of test scores both before and after the intervention. Using the National Longitudinal Survey of Youth, we find a nonlinear relationship between test scores and one important outcome: log wages. We find no consistent pattern in the curvature of log wage returns to test scores (whether percentiles, scaled, or raw scores). This implies that, used alone, the average gain in test scores is an inadequate measure of school performance and current value-added methodology may misdirect school resources. © 2000 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

Suggested Citation

  • John Cawley & James Heckman & Edward Vytlacil, 1999. "On Policies To Reward The Value Added By Educators," The Review of Economics and Statistics, MIT Press, vol. 81(4), pages 720-727, November.
  • Handle: RePEc:tpr:restat:v:81:y:1999:i:4:p:720-727
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    References listed on IDEAS

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    Cited by:

    1. Carneiro, Pedro & Heckman, James J., 2003. "Human Capital Policy," IZA Discussion Papers 821, Institute for the Study of Labor (IZA).
    2. Flavio Cunha & James J. Heckman & Susanne M. Schennach, 2010. "Estimating the Technology of Cognitive and Noncognitive Skill Formation," Econometrica, Econometric Society, vol. 78(3), pages 883-931, May.
    3. Erwin Ooghe & Erik Schokkaert, 2016. "School accountability: can we reward schools and avoid pupil selection?," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, pages 359-387.
    4. Carneiro, Pedro & Heckman, James J & Masterov, Dimitriy V, 2005. "Labor Market Discrimination and Racial Differences in Premarket Factors," Journal of Law and Economics, University of Chicago Press, vol. 48(1), pages 1-39, April.
    5. Gadi Barlevy & Derek Neal, 2012. "Pay for Percentile," American Economic Review, American Economic Association, pages 1805-1831.
    6. Nirav Mehta, 2017. "Targeting the Wrong Teachers? Linking Measurement with Theory to Evaluate Teacher Incentive Schemes," University of Western Ontario, Centre for Human Capital and Productivity (CHCP) Working Papers 20171, University of Western Ontario, Centre for Human Capital and Productivity (CHCP).
    7. Alan Krueger & Diane Whitmore, 2001. "Would Smaller Classes Help Close the Black-White Achievement Gap?," Working Papers 830, Princeton University, Department of Economics, Industrial Relations Section..
    8. Borghans Lex & Golsteyn Bart H.H. & Heckman James & Humphries John Eric, 2011. "Identification Problems in Personality Psychology," Research Memorandum 025, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    9. Koop, Gary & Tobias, Justin L., 2006. "Semiparametric Bayesian inference in smooth coefficient models," Journal of Econometrics, Elsevier, pages 283-315.
    10. Heckman, James J. & Masterov, Dimitriy V., 2004. "Skill Policies for Scotland," IZA Discussion Papers 1444, Institute for the Study of Labor (IZA).
    11. Janet Currie & Duncan Thomas, 1999. "Early Test Scores, Socioeconomic Status and Future Outcomes," NBER Working Papers 6943, National Bureau of Economic Research, Inc.
    12. James Heckman, 2011. "Policies to foster human capital," Educational Studies, Higher School of Economics, issue 3, pages 73-137.
    13. Gadi Barlevy & Derek Neal, 2012. "Pay for Percentile," American Economic Review, American Economic Association, pages 1805-1831.
    14. Kertesi, Gábor & Kézdi, Gábor, 2009. "Általános iskolai szegregáció Magyarországon az ezredforduló után
      [Primary school segregation in Hungary at the turn of the century]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 959-1000.
    15. Elizabeth U. Cascio & Douglas O. Staiger, 2012. "Knowledge, Tests, and Fadeout in Educational Interventions," NBER Working Papers 18038, National Bureau of Economic Research, Inc.
    16. Luciano Fanti & Domenico Buccella, 2017. "Manager‐Union Bargaining Agenda Under Monopoly and with Network Effects," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 38(6), pages 717-730, September.
    17. Yunker, James A., 2005. "The dubious utility of the value-added concept in higher education: the case of accounting," Economics of Education Review, Elsevier, vol. 24(3), pages 355-367, June.
    18. Elizabeth Webster & Mark Wooden & Gary Marks, 2004. "Reforming the Labour Market for Australian Teachers," Melbourne Institute Working Paper Series wp2004n28, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    19. Akiko Maruyama & Kazuhiro Yamamoto, 2010. "Variety expansion and fertility rates," Journal of Population Economics, Springer;European Society for Population Economics, pages 57-71.
    20. Alan Krueger & Diane Whitmore, 2001. "Would Smaller Classes Help Close the Black-White Achievement Gap?," Working Papers 830, Princeton University, Department of Economics, Industrial Relations Section..
    21. Flavio Cunha & James J. Heckman, 2008. "Formulating, Identifying and Estimating the Technology of Cognitive and Noncognitive Skill Formation," Journal of Human Resources, University of Wisconsin Press, vol. 43(4).
    22. Dale J. Poirier & Gary Koop & Justin Tobias, 2005. "Semiparametric Bayesian inference in multiple equation models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(6), pages 723-747.
    23. James J. Heckman & Dimitriy V. Masterov, 2005. "Allander Series: Skill Policies for Scotland," NBER Working Papers 11032, National Bureau of Economic Research, Inc.

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