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A signalling model of school grades: centralized versus decentralized examinations

Author

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  • Maria De Paola

    () (Dipartimento di Economia e Statistica, Università della Calabria)

  • Vincenzo Scoppa

    () (Dipartimento di Economia e Statistica, Università della Calabria)

Abstract

In this paper we examine the signalling value for skills of different examination systems in relation to errors that may affect grades obtained by students. We show that more precise evaluation systems, being associated to a higher reactivity of wages to school grades, induce an higher level of student effort. However, the effect is heterogeneous, low ability students tend to react less compared to high ability students. Moreover, from our analysis, it emerges that individuals endowed with low abilities may prefer less accurate evaluation systems. Nevertheless, when productivity increases the convenience of these systems reduces and the number of individuals preferring them shrinks. Our analysis highlights an important trade-off between centralized and decentralized evaluation systems. Frequent evaluations, typical of decentralized systems, reduce the impact on grades of errors that influence student performance and by this way diminish signal noise, on the other hand, different teachers generally adopt different performance assessment standards, and this tends to produce noisier evaluations. Conversely, centralized systems use common evaluation standards, but their frequency is limited by relevant administration costs and then produce evaluations that are more affected by errors influencing student performance. In the last part of the paper we investigate the relationship between the optimal class size and evaluation systems. We show that under decentralized evaluation systems class size also affects the signal noise. In fact, larger classes may reduce the frequency of evaluations undertaken by teachers.

Suggested Citation

  • Maria De Paola & Vincenzo Scoppa, 2008. "A signalling model of school grades: centralized versus decentralized examinations," Economics of Education Working Paper Series 0025, University of Zurich, Department of Business Administration (IBW).
  • Handle: RePEc:iso:educat:0025
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    File URL: http://repec.business.uzh.ch/RePEc/iso/leadinghouse/0025_lhwpaper.pdf
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    References listed on IDEAS

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    1. De Fraja, Gianni & Landeras, Pedro, 2006. "Could do better: The effectiveness of incentives and competition in schools," Journal of Public Economics, Elsevier, vol. 90(1-2), pages 189-213, January.
    2. Victor Lavy, 2009. "Performance Pay and Teachers' Effort, Productivity, and Grading Ethics," American Economic Review, American Economic Association, vol. 99(5), pages 1979-2011, December.
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    Cited by:

    1. Florian Birkenfeld, 2008. "What makes up a central exit examination?," Working Papers 065, Bavarian Graduate Program in Economics (BGPE).

    More about this item

    Keywords

    signalling modell; school grades;

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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