Implicit Performance Awards: An Empirical Analysis of the Labor Market for Public School Administrators
We explore the microeconomic foundations of public school accountability programs, focusing on the incentives of school administrators to engage in effort to improve the performance of the campuses they are managing. In particular, we investigate the impact of administrators on school performance and the potential effects of a schools performance on the mobility and career advancement opportunities of its administrators. We exploit a unique dataset, consisting of the principals and performance (test scores) of all Texas public schools from 1989-2006 and the employment and wage histories during that same period for all administrators. These data enable us to determine what contributes to the decisions regarding hiring of administrators and how past experience affects their future labor market experience. Our preliminary analysis of the data indicates considerable turnover among school administrators less than three percent of schools have the same principal over the entire 17-year period. Individual administrators also change jobs frequently; the combination will enhance our ability (relative to the literature) to tease out the effects of individual administrators on school performance. In many cases, there are substantial changes in salary associated with job mobility and transitions. Therefore, individuals incentives to improve their schools performance may depend on factors such as the stage of their career (older principals closer to retirement having less time to benefit from higher wages) or the characteristics of their current position (and its corresponding opportunities for career advancement). Understanding the role played by individual incentives can help to sharpen policy interventions aimed at improving school performance. At the same time, the information we have collected on schools and administrators allow us to engage in a detailed study of this particular labor market. The empirical personnel economics literature has recently begun to exploit this sort of matched employer-employee dataset to test various theories about how labor markets operate. Our data are ideal for such an application for several reasons: (1) we have a complete panel with a large number of hiring organizations; (2) turnover and promotion happen almost exclusively within the schools and districts in our sample; (3) there is considerable (exogenous) variation in the size of schools and the organizational structure of school districts; (4) wage data are included and represent the bulk (e.g., no stock options to consider) of employee compensation; and (5) school test scores provide a universal metric on which the performance of employees in the dataset can be evaluated. These attractive features present the opportunity for drawing, from this particular analysis, more general conclusions about the interaction between organizational structure and both internal and external labor markets.
JulieBerry Cullen, Michael Mazzeo
Cullen, JulieBerry, and Michael Mazzeo. 2016. Implicit Performance Awards: An Empirical Analysis of the Labor Market for Public School Administrators.