Managers’ Productivity and Recruitment in the Public Sector: The Case of School Principals

Governments face many constraints in attracting talented managers to the public sector, where high-powered incentives are often absent. In this paper, we study how a civil service reform in Chile changed the effectiveness of a vital group of public sector managers, school principals. We measure principals’ e˙ectiveness using an extension of the canonical teacher value-added model and we evaluate the effect of the reform using a dfference-in-differences approach. We find that public schools appoint more effective managers after increasing the competitiveness and transparency of their se-lection process. Our result shows that better recruitment policies can enhance service provision in the public sector, despite rigid wage schemes.

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