Decentralized Governance and the Quality of School Leadership

37 Pages Posted: 7 Mar 2016

See all articles by Derek Laing

Derek Laing

Pennsylvania State University, College of the Liberal Arts - Department of Economic

Steven Rivkin

University of Illinois at Chicago

Jeffrey C. Schiman

Georgia Southern University - Department of Finance and Economics

Jason Ward

University of Illinois at Chicago - Department of Economics

Date Written: March 2016

Abstract

In response to widespread dissatisfaction with the schools, the 1988 Chicago School Reform Act decentralized school governance by forming elected local school councils (LSCs) responsible for principal hiring, evaluation, and contract renewal as well as other management functions. Subsequent legislation outlined circumstances in which the district could reclaim authority from the LSC, thereby limiting local control. This paper investigates the distribution of principal effectiveness under a system in which there is uncertainty over the locus of decision-making authority. We first establish the presence of significant variation in principal effectiveness based on both an analysis of variance approach and the estimation of principal fixed effects. Teacher survey responses support the findings based on the principal fixed effects, though the much smaller magnitude of the analysis of variance estimates suggest that unobserved shocks inflate many existing estimates of the variance in principal effectiveness. We next consider potential differences in LSC behavior that contribute to the variation. Following Aghion and Tirole (1997) we develop a model that highlights the tensions between formal and real authority and incorporates potential differences in LSC capacity and incentives to maximize school quality. Using proxies for managerial capacity and incentives we find evidence largely consistent with the theory, showing that LSCs with higher management capacity and stronger incentives to raise school quality experience larger gains in principal effectiveness following the end of contracts.

Suggested Citation

Laing, Derek and Rivkin, Steven and Schiman, Jeff C. and Ward, Jason, Decentralized Governance and the Quality of School Leadership (March 2016). NBER Working Paper No. w22061. Available at SSRN: https://ssrn.com/abstract=2743060

Derek Laing (Contact Author)

Pennsylvania State University, College of the Liberal Arts - Department of Economic ( email )

524 Kern Graduate Building
University Park, PA 16802-3306
United States

Steven Rivkin

University of Illinois at Chicago ( email )

Jeff C. Schiman

Georgia Southern University - Department of Finance and Economics ( email )

P.O. Box 815s
Statesboro, GA 30460
United States

Jason Ward

University of Illinois at Chicago - Department of Economics ( email )

725 University Hall (UH)
Chicago, IL 60607-7121
United States

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