Estimating the Effect of Leaders on Public Sector Productivity: The Case of School Principals

Although much has been written about the importance of leadership in the determination of organizational success, there is little quantitative evidence due to the difficulty of separating the impact of leaders from other organizational components – particularly in the public sector. Schools provide an especially rich environment for studying the impact of public sector management, not only because of the hypothesized importance of leadership but also because of the plentiful achievement data that provide information on institutional outcomes. Outcome-based estimates of principal value-added to student achievement reveal significant variation in principal quality that appears to be larger for high-poverty schools. Alternate lower-bound estimates based on direct estimation of the variance yield smaller estimates of the variation in principal productivity but ones that are still important, particularly for high poverty schools. Patterns of teacher exits by principal quality validate the notion that a primary channel for principal influence is the management of the teacher force. Finally, looking at principal transitions by quality reveals little systematic evidence that more effective leaders have a higher probability of exiting high poverty schools.