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The Effect of Contracting Out Low Performing Schools on Student Performance

Listed author(s):
  • Whitney Ruble

    ()

    (Department of Economics, Tulane University)

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    Proponents of charter schools and portfolio management models argue that contracting out entire schools to management organizations can improve student performance and decrease costs by giving schools autonomy in exchange for accountability. Little evidence exists, however, on whether contracting is an effective policy in education. In New Orleans, most of the public schools have been contracted out to nonprofit management organizations over the past ten years (referred to as district to charter or D2C). Several of those contracts have been terminated and schools are then contracted out to new management organizations (charter to charter or C2C). This study uses difference-in-differences to analyze the effect that D2Cs and C2Cs have on students. The results indicate that student test scores increase by the second year after both D2Cs and C2Cs. The scores increase even sooner, after only one year for C2Cs. However, if failing schools are closed instead of being contracted out, students do not experience any change in test scores.

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    File URL: http://econ.tulane.edu/RePEc/pdf/tul1521.pdf
    File Function: First Version, October 2015
    Download Restriction: no

    Paper provided by Tulane University, Department of Economics in its series Working Papers with number 1521.

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    Date of creation: Oct 2015
    Handle: RePEc:tul:wpaper:1521
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    Web page: http://econ.tulane.edu

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    1. Eric A. Hanushek & John F. Kain & Steven G. Rivkin, 2001. "Disruption versus Tiebout Improvement: The Costs and Benefits of Switching Schools," NBER Working Papers 8479, National Bureau of Economic Research, Inc.
    2. Scott A. Imberman & Adriana D. Kugler & Bruce I. Sacerdote, 2012. "Katrina's Children: Evidence on the Structure of Peer Effects from Hurricane Evacuees," American Economic Review, American Economic Association, vol. 102(5), pages 2048-2082, August.
    3. Abdulkadiro─člu, Atila & Angrist, Joshua & Hull, Peter D. & Pathak, Parag A., 2015. "Charters Without Lotteries: Testing Takeovers in New Orleans and Boston," IZA Discussion Papers 8985, Institute for the Study of Labor (IZA).
    4. Brummet, Quentin, 2014. "The effect of school closings on student achievement," Journal of Public Economics, Elsevier, vol. 119(C), pages 108-124.
    5. Trevor L. Brown & Matthew Potoski, 2003. "Managing contract performance: A transaction costs approach," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 22(2), pages 275-297.
    6. Janet Rothenberg Pack, 1987. "Privatization of public-sector services in theory and practice," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 6(4), pages 523-540.
    7. Baker, George P, 1992. "Incentive Contracts and Performance Measurement," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 598-614, June.
    8. Becker, Edmund R & Sloan, Frank A, 1985. "Hospital Ownership and Performance," Economic Inquiry, Western Economic Association International, vol. 23(1), pages 21-36, January.
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