“Discretionary Hiring and Inequality: Evidence from School Principals”

Matteo Bobba

Toulouse School of Economics (TSE)

Abstract:  We exploit rich administrative data on the centralized teacher recruitment drive in Peru to quantify how school principals' hiring decisions shape the distribution of student achievement. Discretionary hiring selects slightly higher value-added teachers than test-based hiring, on average, but remains largely misaligned with the objective of maximizing student achievement. We find that these aggregate patterns in the data hide substantial heterogeneity that we quantify using a flexible discrete choice model of principals' ranking behavior. Heterogeneity in hiring practices explains half of the standard deviation in the value-added of hired teachers, indicating that discretionary hiring largely contributes to inequality in student achievement.