On the determinants of school district efficiency: Competition and monitoring

A number of researchers have asserted that inefficiency in the U.S. school system arises from a lack of incentives For public schools to behave efficiently. This paper uses a Shephard input distance function to model educational production, and a switching-regressions estimation to explore the relationship between school district efficiency and two existing incentive mechanisms-competition and voter monitoring. We find evidence that ease uf monitoring enhances both technical and allocative efficiency of urban school districts, and that increased competition reduces allocative inefficiency in communities above a competitive threshold. We find no evidence that competition is related to technical inefficiency. (C) 2001 Academic Press.