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Cornell University ILR School DigitalCommons@ILR Faculty ublications - Human Resource Studies Human Resource Studies April 2004 Institutional Effects in a Simple Model of Educational Production J ohn H. Bishop Cornell University, jhb5@ Ludger Woesmann Kiel Institute of World Economics Follow this and additional works at : /hrpubs Thank you for downloading an article from DigitalCommons@ILR . Support this valuable resource today ! This Article is brought to you for free and open access by the Human Resource Studies at DigitalCommons@ILR . It has been accepted for inclusion in Faculty ublications - Human Resource Studies by an authorized administrator of DigitalCommons@ILR . For more information, please contact hlmdigital@. Institutional Effects in a Simple Model of Educational Production Abstract 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. Keywords educational production, principal-agent model, institutions of the education system Comments Suggested Citation Bishop, J. Woesmann, L. (2004). Institu