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 effici ently. This paper uses a Shephard input distance function to model educatio nal production, and a switching-regressions estimation to explore the relat ionship between school district efficiency and two existing incentive mecha nisms-competition and voter monitoring. We find evidence that ease uf monit oring enhances both technical and allocative efficiency of urban school dis tricts, and that increased competition reduces allocative inefficiency in c ommunities above a competitive threshold. We find no evidence that competit ion is related to technical inefficiency. (C) 2001 Academic Press.