The Dynamic Effects of Educational Accountability

Recent education accountability reforms feature school-level performance targets that condition on prior scores to account for student heterogeneity. Yet doing so introduces potential dynamic distortions to incentives: teachers may be less responsive to the reform today to avoid more onerous future targets--an instance of the so-called `ratchet effect.' Guided by a dynamic model and utilizing rich educational panel data from North Carolina, I exploit school grade span variation to identify any dynamic gaming, finding compelling evidence of ratchet effects. I then directly estimate the structural parameters of the corresponding model, uncovering complementarities between teacher effort and student ability.