Hanushek, E. A. & Rivkin, S. G. (2003)

‘Does Public School Competition Affect Teacher Quality?’

in Hoxby, C. (ed.), The Economics of School Choice, University of Chicago Press

• Investigates whether teacher quality is an important channel through which competition affects student outcomes.
• Uses panel data to test the hypothesis that competition should lead to less variance in teacher quality, using a Herfindahl index to measure the level of competition.
  

Key results:

• The authors find that less competition does indeed lead to higher within-school variance in teacher quality, but only when competition is measured at the school level, not the district level.
• The results imply that a one standard deviation increase in the degree of competition would increase student achievement 5 times more than a one s.d. reduction in class size.