Publication Date

April 2004


This paper presents a model of educational production that tries to make sense of recent evidence on effects of institutional arrangements on student performance. In a simple principal-agent framework, students choose their learning effort to maximize their net benefits, while the government chooses educational spending to maximize its net benefits. In the jointly determined equilibrium, schooling quality is shown to depend on several institutionally determined parameters. The impact on student performance of institutions such as central examinations, centralization versus school autonomy, teachers' influence, parental influence, and competition from private schools is analyzed. Furthermore, the model can rationalize why positive resource effects may be lacking in educational production.


Suggested Citation
Bishop, J. & Woesmann, L. (2004). Institutional effects in a simple model of educational production. Education Economics, 12, 17-38.

Required Publisher Statement
This is a postprint. This is an electronic version of an article published as Bishop, J. & Woesmann, L. (2004). Institutional Effects in a Simple Model of Educational Production. Education Economics, 12, 17-38. Education Economics is available online. Click here for the final version of this article.