Has No Child Left Behind Enhanced School Efficiency

Abstract

Public schools have been found to be inefficient in producing education outcomes. Few studies, however, have investigated the sources of inefficiency in education. Lack of accountability is a possible contributing factor. As a national accountability policy, the No Child Left Behind (NCLB) act has become the focus of many studies since its passage into law. Nonetheless, no study has examined its influence on school inefficiency. This study fills the gap in the literature by investigating whether NCLB has enhanced school efficiency. I use two-stage analysis to address the issue. At the first stage, Data Envelopment Analysis (DEA), a non-parametric approach, is used to estimate efficiency of individual schools. At the second stage, the estimated efficiency from the first stage models are used as dependent variables and the influence of NCLB on efficiency is examined by using a difference-in-differences estimator. The difference-in-differences estimator is constructed based on schools¡¯ distinct responses toward NCLB¡¯s sanctions. Schools with little threats of facing sanctions do not have incentives to change their behavior and are considered as a control group. Those at risk of not making Adequate Yearly Progress (AYP) have strong incentives to change their behavior and are considered as the treatment group. The effects of NCLB on efficiency are captured by the difference between two groups of schools with regard to their pre-NCLB to post-NCLB changes. Using three states¡¯ data, Minnesota, Indiana, and South Carolina, I find that NCLB has positively influenced school efficiency. Schools that are threatened by NCLB sanctions have improved their efficiency more rapidly than those that are not. The findings have important policy implications, in particular under the current tight economic situation.