Local Versus Central School Control and the Distribution of Principal Effectiveness

In Chapter 1 of my dissertation, 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. In Chapter 2 of my dissertation, I study a principal merit award program in the CPS. Although visible awards may increase worker effort and productivity, they may also produce unintended consequences. By acting as a signal of quality, awards may increase outside options and increase worker turnover. In this chapter, I use a regression discontinuity design exploiting the fact that Chicago provides principals with merit awards based solely on achieving a particular threshold of performance. Given the similarity between awardees and non-awardees at the threshold, any differences in productivity, motivation, or ability are unable to explain subsequent differences in job mobility. I find that principals who just exceeded the threshold for a merit award are more likely to exit their school the year after winning compared to principals who fell slightly short of the award threshold. Those who transition within the district move toward higher paying and higher test performance settings than principals who just lose. The findings are consistent with the predictions of a search model where awards that signal high-quality performance shift right the distribution of outside job offers, leading to turnover for award winners.