Subjective performance evaluation in the public sector: evidence from school inspections

This paper investigates the effects of being evaluated under a novel subjective assessment system where independent inspectors visit schools at short notice, disclose their findings, and sanction schools rated fail. I demonstrate that a fail inspection rating leads to test score gains for primary school students. I find no evidence to suggest that fail schools are able to inflate test score performance by gaming the system. Relative to purely test-based accountability systems, this finding is striking and suggests that oversight by evaluators who are charged with investigating what goes on inside the classroom may play an important role in mitigating such strategic behavior. There appear to be no effects on test scores following an inspection for schools rated highly by the inspectors. This suggests that any effects from the process of evaluation and feedback are negligible for nonfailing schools, at least in the short term.