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Institutional effects in a simple model of educational production

  • Bishop, John H.
  • Wößmann, Ludger

This paper presents a model of educational production that tries to make sense of recent evidence on effects of institutional arrangements on student performance. In a simple principal-agent framework, students choose their learning effort to maximize their net benefits, while the government chooses educational spending to maximize its net benefits. In the jointly determined equilibrium, schooling quality is shown to depend on several institutionally determined parameters. The impact on student performance of institutions such as central examinations, centralization versus school autonomy, teachers’ influence, parental influence, and competition from private schools is analyzed. Furthermore, the model can rationalize why positive resource effects may be lacking in educational production.

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Paper provided by University of Munich, Department of Economics in its series Munich Reprints in Economics with number 20279.

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Date of creation: 2004
Date of revision:
Publication status: Published in Education Economics 1 12(2004): pp. 17-38
Handle: RePEc:lmu:muenar:20279
Contact details of provider: Postal: Ludwigstr. 28, 80539 Munich, Germany
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Web page: http://www.vwl.uni-muenchen.de

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  1. Pritchett, Lant & Filmer, Deon, 1999. "What education production functions really show: a positive theory of education expenditures," Economics of Education Review, Elsevier, vol. 18(2), pages 223-239, April.
  2. Betts, Julian R, 1998. "The Impact of Educational Standards on the Level and Distribution of Earnings," American Economic Review, American Economic Association, vol. 88(1), pages 266-75, March.
  3. Edward P. Lazear, 1999. "Educational Production," NBER Working Papers 7349, National Bureau of Economic Research, Inc.
  4. Andrei Shleifer, 1998. "State versus Private Ownership," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 133-150, Fall.
  5. North, Douglass C., 1993. "Economic Performance through Time," Nobel Prize in Economics documents 1993-2, Nobel Prize Committee.
  6. Hoxby, Caroline M., 1999. "The productivity of schools and other local public goods producers," Journal of Public Economics, Elsevier, vol. 74(1), pages 1-30, October.
  7. Bishop, John H, 1997. "The Effect of National Standards and Curriculum-Based Exams on Achievement," American Economic Review, American Economic Association, vol. 87(2), pages 260-64, May.
  8. Erich Gundlach & Ludger Wößmann & Jens Gmelin, 1999. "The Decline of Schooling Productivity in OECD Countries," Kiel Working Papers 926, Kiel Institute for the World Economy.
  9. Hoxby, Caroline Minter, 1996. "How Teachers' Unions Affect Education Production," The Quarterly Journal of Economics, MIT Press, vol. 111(3), pages 671-718, August.
  10. Alan B. Krueger, 1997. "Experimental Estimates of Education Production Functions," NBER Working Papers 6051, National Bureau of Economic Research, Inc.
  11. Cecilia Elena Rouse, 1998. "Private School Vouchers And Student Achievement: An Evaluation Of The Milwaukee Parental Choice Program," The Quarterly Journal of Economics, MIT Press, vol. 113(2), pages 553-602, May.
  12. Caroline Minter Hoxby, 1994. "Do Private Schools Provide Competition for Public Schools?," NBER Working Papers 4978, National Bureau of Economic Research, Inc.
  13. Gundlach, Erich & Wößmann, Ludger & Gmelin, Jens, 2001. "The decline of schooling productivity in OECD countries," Munich Reprints in Economics 20451, University of Munich, Department of Economics.
  14. Caroline M. Hoxby, 2000. "The Effects Of Class Size On Student Achievement: New Evidence From Population Variation," The Quarterly Journal of Economics, MIT Press, vol. 115(4), pages 1239-1285, November.
  15. 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.
  16. Bishop, J., 1997. "The Effect of national Standards and Curriculum-Based Exams on Achievement," Papers 97-01, Cornell - Center for Advanced Human Resource Studies.
  17. Caroline M. Hoxby, 2000. "Does Competition among Public Schools Benefit Students and Taxpayers?," American Economic Review, American Economic Association, vol. 90(5), pages 1209-1238, December.
  18. Eric A. Hanushek, . "The Evidence on Class Size," Wallis Working Papers WP10, University of Rochester - Wallis Institute of Political Economy.
  19. Costrell, Robert M, 1994. "A Simple Model of Educational Standards," American Economic Review, American Economic Association, vol. 84(4), pages 956-71, September.
  20. Joshua D. Angrist & Victor Lavy, 1999. "Using Maimonides' Rule To Estimate The Effect Of Class Size On Scholastic Achievement," The Quarterly Journal of Economics, MIT Press, vol. 114(2), pages 533-575, May.
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