Managerial effort under asymmetric information: The case of public schools in Brazil

Abstract

This paper uses a principal-agent model to investigate how public school managers react to government incentives based on previous school performance. Using data from the Brazilian Student Evaluation Exam (Prova Brasil – PB) and the School Census, we estimate a managerial effort function by quantile regression. The findings show a regular non-linear relationship between managerial effort and lagged school performance, indicating that marginal effort is decreasing when a previously ineffective school manager becomes effective on reaching a performance goal. This evidence is in line with the adopted theoretical approach and provides new parameters for educational policies designs.