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Productivity and Sectoral Allocation: The Labor Market of School Principals


  • Muñoz, P


  • Prem, M



An important question is whether differences in management can explain variation in productivity and whether different compensation schemes and selection policies can impact the allocation of managerial effectiveness. To investigate this, we measure the value-added of school principals and study their labor market outcomes in Chile, where a large subsidized private sector competes with public sector schools. Using large administrative data sets on student performance and school personnel, we document substantial variation across principals in their ability to improve students’ learning. We show that effective principals increase the retention of young and high value-added teachers, and that principal effectiveness is recognized by the school community. A theoretical model of job offers and acceptances guides our empirical inquiry into the principals’ labor market. Leveraging observational and quasi-experimental variation, we show that: (1) principals’ effectiveness is more strongly associated with wages in private schools, and (2) despite relatively rigid wages, public schools can attract better principals by improving their personnel selection process.

Suggested Citation

  • Muñoz, P & Prem, M, 2019. "Productivity and Sectoral Allocation: The Labor Market of School Principals," Documentos de Trabajo 017596, Universidad del Rosario.
  • Handle: RePEc:col:000092:017596

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    More about this item


    School principal; Productivity; Sectoral allocation;

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J8 - Labor and Demographic Economics - - Labor Standards
    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics
    • I2 - Health, Education, and Welfare - - Education


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