Association for Public Policy Analysis & Management

School accountability has been introduced to sharpen the focus on achievement increase pressure on schools and districts. By increasing the availability of information about student outcomes and requiring the use of this information to rate schools, the federal and state governments have attempted to elevate the quality of education and the efficiency of provision. However, the focus on student pass rates rather than growth in achievement potentially provides a flawed incentive structure based on biased information. In this study, we investigate the relationships between Texas elementary school principal labor market outcomes and the performance of the schools they lead. Regression discontinuity estimates that exploit the details of the accountability system find a strong causal effect of failure to earn an acceptable rating on the probability of continuing as principal and salary growth. By definition, principals on either side of the boundary are equally effective. Further, because of the substantial overlap in the distribution of principal effectiveness across schools earning different ratings, spurring dismissal at this boundary is poorly targeted and almost certainly disadvantages schools serving low-income populations that already have difficulty competing in the principal labor market.