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2005 Special Issue Int'l J. Educ. L. & Pol'y 57 (2005)
Accountability through External Exams and the Management of Educational Institutions

handle is hein.journals/ijelp2005 and id is 57 raw text is: Accountability through external exams and the management of educational institutions' Ludger W6Bmann* 1. Introduction: How to 'produce' educational performance In the education process, information is usually asymmetrically distributed between principals and agents. As a consequence, agents may behave opportunistically unless they can be held accountable. That is, they can get away with behaving in ways that advance their own interest rather than the principals' interest without negative consequences for them. By providing comparable performance information, external examinations ease the monitoring problems inherent in these principal-agent relationships, which leads to an improvement in the overall performance of the system. External exams align the incentives of the agents with the goals of the system, so that they additionally make it more likely that schools act according to the goals of the system if they are given autonomy. Therefore, there is a complementarity between external examination and school autonomy: Managing educational institutions by giving them autonomy is more beneficial in systems with external exams. 1.1 Motivation and background The main motivation for caring about a high quality of the education system lies in its positive impact for societal productivity and equality. The quality of the education learnt in school leads to higher productivity of both individuals and economies at large (W63mann 2003a, 2003b). At the same time, high-quality education for all also contributes to a more balanced income distribution in society (Gundlach et al. 2003; Nickell 2004). It is thus critical from a political and economic perspective to determine how the quality of educational performance may be improved. Extensive empirical evidence suggests that this cannot be done merely by spending more on education. In most cases, additional resources do not seem to improve student performance either over time or in a cross-sectional comparison (cf. Gundlach et al. 2001; Hanushek 2002, 2003; W613mann and West 2005). In contrast, an institutional structure of the education system which sets appropriate incentives has been shown to be associated with better student performance (W6d3mann 2003c, 2004). Central or external exams have been identified as such a performance-promoting institution (Bishop 1997; W613mann 2003c). Instead of leaving the organization, implementation and marking of the examination of educational performance to individual teachers or schools, central exams are run by an external agency. The comparable information on student performance generated in this way changes the information status in the education system. External exams thus change the incentives affecting all those involved t This paper draws heavily on W6fmann (2003e and 2005b). 1 would like to thank conference participants in Frascati and Bologna for helpful discussions and comments. I If Institute for FIconomic Research at the University of Munich and (CI Sifo.

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