Anti-Lemons: School Reputation, Relative Diversity, and Educational Quality
Friedman (1962) observed that the ability of firms to acquire and maintain reputations for quality is a key ingredient for the efficient provision of goods and services in a market economy. This paper explores the implications of school reputation for skill acquisition and labor market outcomes in an otherwise competitive market. We find that reputation effects can explain several puzzling findings in the economics of education, including the fact that competition can, but does not always, improve skill acquisition. This result follows from an anti-lemons effect (in contrast to Akerlof's lemons effect) that arises when schools can enhance their reputation by positively selecting their students. This leads to excess demand for "high quality" selective schools that drive out non-selective schools. This in turn reduces "relative diversity", a measure of ability dispersion in a school, leading to lower skill acquisition.
|Date of creation:||Aug 2012|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
|Order Information:|| Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Arnott, Richard & Rowse, John, 1987.
"Peer group effects and educational attainment,"
Journal of Public Economics,
Elsevier, vol. 32(3), pages 287-305, April.
- Philip S. Babcock & Mindy Marks, 2010.
"The Falling Time Cost of College: Evidence from Half a Century of Time Use Data,"
NBER Working Papers
15954, National Bureau of Economic Research, Inc.
- Philip Babcock & Mindy Marks, 2011. "The Falling Time Cost of College: Evidence from Half a Century of Time Use Data," The Review of Economics and Statistics, MIT Press, vol. 93(2), pages 468-478, May.
- Babcock, Phillip & Marks, Mindy, 2010. "The Falling Time Cost of College: Evidence from Half a Century of Time Use Data," University of California at Santa Barbara, Economics Working Paper Series qt7rc9d7vz, Department of Economics, UC Santa Barbara.
- Alejandra Mizala & Miguel Urquiola, 2007.
"School Markets: The Impact of Information Approximating Schools' Effectiveness,"
NBER Working Papers
13676, National Bureau of Economic Research, Inc.
- Mizala, Alejandra & Urquiola, Miguel, 2013. "School markets: The impact of information approximating schools' effectiveness," Journal of Development Economics, Elsevier, vol. 103(C), pages 313-335.
- Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4 National Bureau of Economic Research, Inc.
- Fabian Lange, 2007. "The Speed of Employer Learning," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 1-35.
- C. Kirabo Jackson, 2010. "Do Students Benefit from Attending Better Schools? Evidence from Rule-based Student Assignments in Trinidad and Tobago," Economic Journal, Royal Economic Society, vol. 120(549), pages 1399-1429, December.
- Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, May.
- W. Bentley MacLeod & Miguel Urquiola, 2009.
"Anti-Lemons: School Reputation and Educational Quality,"
NBER Working Papers
15112, National Bureau of Economic Research, Inc.
- MacLeod, Bentley, 2009. "Anti-Lemons: School Reputation and Educational Quality," Department of Economics, Working Paper Series qt3rc708kd, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Lisa Barrow & Cecilia Elena Rouse, 2008. "School vouchers and student achievement: recent evidence, remaining questions," Working Paper Series WP-08-08, Federal Reserve Bank of Chicago.
- Jesse M. Rothstein, 2006. "Good Principals or Good Peers? Parental Valuation of School Characteristics, Tiebout Equilibrium, and the Incentive Effects of Competition among Jurisdictions," American Economic Review, American Economic Association, vol. 96(4), pages 1333-1350, September.
When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp6805. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak)
If references are entirely missing, you can add them using this form.