2 Micro: Schooling Quality and Educational Production

A second major area of the microeconomics of education is the determination of student achievement in the education process. Microeconometric studies can estimate the effect that family backgrounds, resource endowments and institutional features have on the performance of students in key curricular areas, thus showing how a high quality of schooling may be achieved in the “production” of education in the education “industry,” i.e. in schools and other educational institutions. General studies on the relative effects of families, resources and institutions on student performance exist both for EU countries (Woessmann 2003c, cf. also Section 1 above) and for acceding countries (Ammermüller, Heijke and Woessmann 2005). Schleicher is the responsible co-ordinator both of the well-known PISA student-achievement study (OECD 2001) and of the regular OECD statistical collection Education at a Glance which reports on performance, resources and institutional features for European and other OECD countries (OECD 2002).

Several studies have analysed the effect of family backgrounds on student performance, including Norwegian evidence on the effect of student body composition on school performance and on determinants of parental effort in education production (Bonesrønning 1996; 2003), the relative importance of nature and nurture in the interrelation between family background and schooling (Plug and Vijverberg 2003) and families’ trade-off between child quantity and quality (Hanushek 1992). Education also plays a leading role in the extent of intergenerational mobility in a society (cf. Dearden, Machin and Reed 1997 for Britain).

A key question in the literature on educational production is what role resource endowments can play in enhancing the quality of educational outcomes. Hanushek’s (1986; 2003a) path-breaking and much-cited survey with several updates on this matter has shown that resources in general and class sizes in particular play a very limited role in determining students’ educational performance, revealing the lack of efficiency in public schools and thus a failure of input-based schooling policies. Similar results of the futility of resource policies have also been found for many European countries. For example, substantial increases in real resource endowments per student did not lead to improvements in average student performance in most OECD countries (Gundlach, Woessmann and Gmelin 2001), i.e. schooling productivity as defined by outputs per inputs has declined severely. Vignoles et al. (2000) survey the evidence on resource effects in the United Kingdom.

It is well-known in the meantime that institutional features of the education systems, such as centralization of examination, school autonomy, teacher influence and competition, are much stronger related to the cross-country variation in student performance than resources (Woessmann 2003a). Studies have only recently begun to evaluate in earnest the effec¬tive¬ness of educational policy interventions. One area of such interventions is the field of educational accountability, where policymakers try to hold teachers and schools accountable for what they achieve (cf. Hanushek and Raymond 2001). Another area that received a lot of recent attention is the opportunity of educational vouchers to improve the quality of schooling by giving students and their parents choice and thus introducing competition between schools. Howell and Peterson (2002) and Peterson et al. (2003) analyse key recent randomized experiments on school vouchers, which seem to help in lowering the black-white achievement gap in urban schools in the United States. Filer and Münich (2000) analyse the Czech and Hungarian experience on responses of private and public schools to voucher funding. The relationship between public and private schools and their relative effectiveness also falls in this area (cf. e.g., Jimenez and Sawada 2003).

Finally, the functioning of the teacher labour market affects the quality of schooling in a central way, as well. Dolton (cf. 2004) has analysed the economics of teacher supply extensively, with special attention to the impact of female labour-force participation and choice of occupation (Dolton and Makepeace 1993) and leaving decisions and teacher turnover (Dolton and van der Klaauw 1995; 1999). Further studies on teacher labour markets include Wolter and Denzler’s (2003) analysis of the wage elasticity of teacher supply in Switzerland and the study by Falch, Bonesrønning and Strøm (2005) on teacher sorting, teacher quality and student composition.

More recent studies in this field deal with all the different sub-topics mentioned above. In several articles Torberg Falch and colleagues analyze the teacher labour market: Falch and Strøm (2005) study whether teachers’ quit decisions depend on non-pecuniary job attributes, Falch and Rønning (2007) show that quit decisions of teachers are affected by student achievement. Falch, Johansen and Strøm (2009) study the relationship between shortages on the teacher labour market and business cycles. Our new external advisor Andrew Leigh from Australia has also dealt with the teacher labour market in several studies analyzing the reasons for the decline in teacher aptitude in the US (Hoxby and Leigh 2004) or the effect of the teaching workforce on the raise of students’ academic performance in Australia (Leigh 2009).

Regarding the effects of family background on later outcomes Nielsen, Rosholm, Smith and Husted (2003) show a considerable influence of parents’ capital on the probability of completing a qualifying education and on the entry into the labour market.

Whether school endowments affect academic achievement has been remained an important research question during the last years. West and Woessmann (2006a and 2006b) analyze the effects of class size on student achievement and possible sorting of students into classes of different size in an international comparison of several OECD countries. Bressoux, Kramarz and Proust (2008) study with French survey data the effects of class size and teacher training on student achievement, Leuven, Oosterbeek and Rønning (2008) study class size effects for Norway. Leuven, Lindahl, Oosterbeek and Webbink (2007) evaluate a Dutch Policy that earmarks financial support to schools with a high share of disadvantaged students.

The literature on the institutional effects of several school systems on student achievement has also progressed in recent years. Several studies analyze the effects of ability tracking on student achievement: Hanushek and Woessmann (2006) use data from international comparison tests of student achievement to study effects of tracked school systems on academic performance and inequality. Brunello and Checci (2007) analyze the same question focusing on later outcomes like college enrolment or early wages. West and Woessmann (2008) show, that a larger private school sector improves student achievement in a country. Leuven, Oosterbeek and van der Klaauw (2009) study a policy that provides financial incentives for students to improve their achievements.



2a Families and student achievement, first part
2a Intergenerational mobility, second part
2b Resource, teacher and class-size effects, efficiency
2c System effects (choice, competition, testing, autonomy, etc.), interventions
2d Teacher labour markets