The Impact of School Quality on Educational Performance:

What impact does school quality have on educational outcomes, and what aspects of school quality matter most, remain hotly debated issues in the economics of education. Ambiguity mainly comes from empirical difficulties in separating school effects from the role of various confounding unobserved student characteristics. In this paper, we are able to identify the role of school quality by taking advantage of a unique natural experiment deriving from an ambitious education reform in recruiting new middle school students through a partially randomized assignment undertaken in 1998 by the Eastern City School District of Beijing. By comparing the performance of students with the same situation in the school assignment procedure but who were randomly assigned to different schools, and relating it to relevant indicators of school resources, we are able to measure the impact of school quality on educational performance without being affected by confounding unobserved individual characteristics. We address three issues. First, we test whether the education reform reached its goal of equalizing student performance across middle schools through random assignment. Second, we test whether school quality, including especially teachers’ qualifications and experience, explains differences in school performance. Third, we measure the relative importance of school effects versus students’ individual characteristics in explaining performance in national examinations. We find that, after the reform, differences in performance across middle schools have indeed been sharply reduced. We also find that school effects, especially differentials in teacher qualifications, do play a significant role in explaining students’ test scores. However, we find that individual characteristics play a larger role than school effects in determining students’ performance.