The Dynamic Effects of Educational Accountability
52 Pages Posted: 4 Mar 2012 Last revised: 19 Mar 2015
Date Written: March 1, 2015
This paper provides the first evidence that value-added education accountability schemes induce dynamic distortions. Extending earlier dynamic moral hazard models, I propose a new test for ratchet effects, showing that classroom inputs are distorted less when schools face a shorter horizon over which they can influence student performance. I then exploit grade span variation using rich educational data to credibly identify the extent of dynamic gaming, finding compelling evidence of ratchet effects based on a triple-differences approach. Further analysis indicates that these effects are driven primarily by effort distortions, with teacher reallocations playing a secondary role.
Keywords: Dynamic Gaming, Dynamic Incentives, Ratchet Effects, Educational Accountability, Education Production
JEL Classification: D82, I21, J24, J33, M52
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