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Improving Urban Schools: Two Approaches that Need Each Other

The poor state of America’s urban public school systems is one of the nation’s most pressing domestic policy problems. Two improvement approaches vie for attention in policy circles: changing central office management strategies, and improving incentives. While the two approaches compete for influence, they are in fact complementary. Alone, neither one will make much of a difference. Together they can improve urban school systems.

The low skill levels of students leaving America’s urban public schools constitute one of the nation’s most pressing domestic policy problems. School dropout rates are one of many indicators of the magnitude of the problem. Dropout rates in many urban high schools exceed 50 percent (Balfanz and Legters 2004). Nationally, 35 percent of 35 percent of black and Hispanic students, the majority of whom attend urban public schools, drop out of school prior to graduation (Heckman and LaFontaine 2007).

Changes in the American economy over the last 30 years have dramatically increased the hardships faced by dropouts. As illustrated in Figure 1, the real hourly wages of male high school dropouts declined by 23 percent between 1979 and 2006. During this same period the real wages of four-year college graduates increased by 18 percent.1 It is these economic trends that have created the demand on urban high schools to prepare all students to master the skills needed for success in post-secondary education and training.

Two improvement approaches for improving urban schools vie for attention in policy circles. The first emphasizes the importance of changing central office management strategies. The second focuses on the need to improve incentives. I describe each below, and argue that they are critical complements, not substitutes (Murnane 2007).

A New Role for the Central Office

Scholars of organizations emphasize the importance of a coherent strategy for improving urban public schools. At the heart of this strategy is a new type of partnership between the central office and city schools known as reciprocal accountability. One part of this partnership is that the district leadership requires that schools make progress in improving student achievement. If they do not, there are consequences, often beginning with a change in leadership. The other part is that the district leadership commits itself to providing the resources that schools need to accomplish this goal. These include well educated teachers, on-going training that increases principals’ and teachers’ effectiveness, enough time in the school day for teachers to both work together at instructional improvement and to provide extra help to lagging students, and the resources needed to support the learning of students with varying needs (Elmore 2000).

Making reciprocal accountability a reality requires a new role for the central office. It must recognize that schools vary in capacity and need to be treated differently. Low performing schools need special attention and support. Schools making real progress need the freedom to use resources in new ways. To provide the resources schools need, the district leadership must reallocate resources away from the many programs and activities that absorb funds but do not contribute in a coherent fashion to improving students’ literacy and mathematics skills in the district as a whole.

There is evidence that implementing the management strategy described above enables urban school districts to improve their performance in educating students (Reville 2007). Of course, this raises the question of why all urban districts have not embraced this strategy. Among the many contributing factors are dysfunctional incentive structures for key actors: teachers, school principals, and students.

Improving Incentives

Virtually all public school districts in the United States use compensation systems for teachers that reward advanced degrees and years of teaching experience and nothing else. This makes it extremely difficult to attract skilled teachers to fields in which demand exceeds supply at the prevailing common salaries. It also makes difficult to attract skilled teachers to the schools where they are most needed. It also means that large sums of money go to payments for Master’s Degrees that do not result in increased student learning (Hanushek 2002).

Poor incentives for school principals are another problem. In many urban districts school principals do not have control over many resources. Consequently they lack the tools to lead schools effectively. In many districts, effective principals are paid on the same scale as ineffective principals. The net result is that many urban public schools lack effective leaders.

Incentives for students to focus on academic work are also weak. Except for the modest number of students competing for admission to elite colleges, grades and course selection don’t initially matter much to American high school students.

As economists emphasize, getting the incentives right is critical to improving the performance of urban school systems. Initiatives such as performance-based contracts for teachers and principals and common end-of course examination and enhanced high school graduation requirements for students hold promise for improving incentives for key actors in the educational process.

While I subscribe to the view that incentives matter, I do not think that stronger incentives alone will make much of a difference to the quality of urban education. The reason is that incentives work best when people know how to do the behaviors that are rewarded. This is not the situation in most urban schools, where a great many teachers do not know how to teach more effectively, many principals do not know how to improve the performance of their schools, and a great many students do not know how to master demanding academic material. Nor does the solution lie in simply replacing existing staff with new hires. The work is difficult and most learning to do it well, when learning does take place, is on the job learning.

Stating the incentive challenge in a positive way, people like to do what they do well. Consequently, a critical complement to appropriate incentives is reciprocal accountability, a management system that provides teachers and administrators with the knowledge and skills to improve student achievement and students with the consistently high quality instruction they need to master important skills. This is why better incentives and reciprocal accountability are approaches to improving urban schools that need each other.


Balfanz, R. and N. Legters (2004). Locating the dropout crisis: Which high schools produce the nation’s dropouts? Where are they located? Who attends them? Baltimore, Md., John Hopkins University Center for Social Organization of Schools.

Elmore, R. F. (2000). "Building a New Structure for School Leadership." Albert Shanker Institute(Winter).

Hanushek, E. A. (2002). The Failure of Input-Based Schooling Policies. NBER Working Paper Series. N. B. o. E. Research. Cambridge, MA, National Bureau of Economic Research: 42.

Heckman, J. J. and P. A. LaFontaine (2007). The American high school graduation rate: Trends and levels. Cambridge, National Bureau of Economic Research Working Paper No. 13670.

Murnane, R. J. (2007). Educating Urban Students. Cambridge, MA, National Bureau of Economic Research Working Paper No. 13791.

Reville, P., Ed. (2007). A Decade of Urban School Reform: Persistence and Progress in the Boston Public Schools Cambridge, Harvard Education Press.


1 Jared Bernstein of the Economic Policy Institute provided the information on which these calculations are based. The original data came from Current Population Surveys.

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