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Incentives, resources and the organization of the school system

  • Facundo Albornoz


  • Samuel Berlinski


  • Antonio Cabrales


We study a model where student effort and talent interact with parental and teachers' investments, as well as with school system resources. The model is rich, yet sufficiently stylized to provide novel implications. We can show, for example, that an improvement in parental outside options will reduce parental and school effort, which are partially compensated through school resources. In this way we provide a rationale for the ambiguous existing empirical evidence on the effect of school resources. We also provide a novel microfoundation for peer effects, with empirical implications on welfare and on preferences for sorting across schools.

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Paper provided by Universidad Carlos III, Departamento de Economía in its series Economics Working Papers with number we1103.

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Date of creation: Mar 2011
Date of revision:
Handle: RePEc:cte:werepe:we1103
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  1. Sean Corcoran & William N. Evans, 2010. "Income Inequality, the Median Voter, and the Support for Public Education," NBER Working Papers 16097, National Bureau of Economic Research, Inc.
  2. 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.
  3. Esther Duflo & Pascaline Dupas & Michael Kremer, 2011. "Peer Effects, Teacher Incentives, and the Impact of Tracking: Evidence from a Randomized Evaluation in Kenya," American Economic Review, American Economic Association, vol. 101(5), pages 1739-74, August.
  4. Dennis Epple & Richard Romano & Holger Sieg, . "Admission, Tuition, and Financial Aid Policies in the Market for Higher Education," GSIA Working Papers 2003-04, Carnegie Mellon University, Tepper School of Business.
  5. Dennis Epple & Richard Romano, 2008. "Educational Vouchers And Cream Skimming," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(4), pages 1395-1435, November.
  6. C. Kirabo Jackson, 2009. "Student Demographics, Teacher Sorting, and Teacher Quality: Evidence from the End of School Desegregation," Journal of Labor Economics, University of Chicago Press, vol. 27(2), pages 213-256, 04.
  7. Miguel Urquiola & Eric Verhoogen, 2009. "Class-Size Caps, Sorting, and the Regression-Discontinuity Design," American Economic Review, American Economic Association, vol. 99(1), pages 179-215, March.
  8. Dennis Epple & David Figlio & Richard Romano, 2000. "Competition Between Private and Public Schools: Testing Stratification and Pricing Predictions," NBER Working Papers 7956, National Bureau of Economic Research, Inc.
  9. Brindusa Anghel & Antonio Cabrales, 2010. "The Determinants of Success in Primary Education in Spain," Working Papers 2010-20, FEDEA.
  10. Marte Rønning & Edvin Leuven & Hessel Oosterbeek, 2008. "Quasi-experimental estimates of the effect of class size on achievement in Norway," Working Paper Series 9308, Department of Economics, Norwegian University of Science and Technology.
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