International Finance Discussion Papers (IFDP)
October 1999
When Would Educational Standards Help Improve Scholastic Achievement?
Murat F. Iyigun
Abstract:
I study the potential effects on student performance to be expected from setting mandatory standards in primary and secondary education. To that end, I present a model in which investment in education is indivisible. Thus, if demand exceeds supply at any level of education, allocation is carried out--at least in part--via test scores. The model highlights how the effectiveness of educational standards in altering student performance depends on the college and secondary school education premia, the stringency of standards, and the supply of college education--factors which together determine the competitiveness of college admissions. A relatively high college education premium raises the incentive to finish high school and apply to college, but the marginal benefit of meeting standards or the cost of non-compliance depend on the secondary education premium. Thus, the effects on student performance if education standards are raised may be relatively small when the secondary education premium is relatively low. Moreover, when the supply of higher education is relatively abundant so that college entrance is a non-competitive process, students' incentive to make their best effort diminishes, and in that case, the role of education premia--and therefore of standards--as incentives may be limited.
Keywords: Tests, student performance, education premia, unskilled wage rate
PDF: Full Paper
Disclaimer: The economic research that is linked from this page represents the views of the authors and does not indicate concurrence either by other members of the Board's staff or by the Board of Governors. The economic research and their conclusions are often preliminary and are circulated to stimulate discussion and critical comment. The Board values having a staff that conducts research on a wide range of economic topics and that explores a diverse array of perspectives on those topics. The resulting conversations in academia, the economic policy community, and the broader public are important to sharpening our collective thinking.