The paper suggests that international differences in educational institutions explain the large international differences in student performance in cognitive achievement tests. A microeconometric student-level estimation based on data for more than 260,000 students from 39 countries reveals that positive effects on student performance stem from centralized examinations and control mechanisms, school autonomy in personnel and process decisions, competition from private educational institutions, scrutiny of achievement, and teacher influence on teaching methods. A large influence of teacher unions on curriculum scope has negative effects on student performance. The findings imply that international differences in student performance are not caused by differences in schooling resources but are mainly due to differences in educational institutions.
education production function institutions incentives