School Consolidations and Teacher Incentive Contracts

25 Pages Posted: 20 Aug 2008

See all articles by Aaron Lowen

Aaron Lowen

Grand Valley State University - Department of Economics

M. Ryan Haley

University of Wisconsin - Oshkosh

Nancy J. Burnett

University of Wisconsin - Oshkosh - Department of Economics

Date Written: August 19, 2008

Abstract

We construct an agency-based model of incentive contracting within the education system. We use this framework to evaluate first-best, second-best, and pooling contracts under a variety of assumptions germane to the consolidation of elementary and secondary schools. By introducing a monitoring technology, an auditor, which serves as liaison between the principal (superintendent) and the agent (teacher), information constraints induced by school consolidations can be alleviated. Using this framework, we consider various policy issues such as how and where teacher incentive contracts might succeed, what may cause incentive contracts to fail, and how to determine optimal school size.

Keywords: Economics of Scale, Educational Economics, Efficiency, Teacher Salaries

JEL Classification: I21, L25, M52

Suggested Citation

Lowen, Aaron and Haley, M. Ryan and Burnett, Nancy J., School Consolidations and Teacher Incentive Contracts (August 19, 2008). Available at SSRN: https://ssrn.com/abstract=1238586 or http://dx.doi.org/10.2139/ssrn.1238586

Aaron Lowen (Contact Author)

Grand Valley State University - Department of Economics ( email )

478c DeVos Center
Grand Rapids, MI 49504
United States

M. Ryan Haley

University of Wisconsin - Oshkosh ( email )

800 Algoma Blvd
Oshkosh, WI WI 54901
United States

Nancy J. Burnett

University of Wisconsin - Oshkosh - Department of Economics ( email )

800 Algoma Blvd.
Oshkosh, WI 54901
United States

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