-- PRELIMINARY DRAFT, DO NOT QUOTE, COMMENTS WELCOME-- Value-Added Models and the Measurement of Teacher Quality

The recent availability of administrative databases that track individual students and their teachers over time has lead to both a surge in research measuring teacher quality and interest in developing accountability systems for teachers. Existing studies employ a variety of empirical models, yet few studies explicitly state or test the assumptions underlying their models. Using an extensive database from the State of Florida, we test many of the central assumptions of existing models and determine the impact of alternative methods on measures of teacher quality. We find that the commonly used “restricted value-added ” or “achievement-gain ” model is a good approximation of the more cumbersome cumulative achievement model. Within the context of the restricted value-added model, we find it is important to control for unmeasured student, teacher and school heterogeneity. Relying on measurable characteristics of students, teachers and schools alone likely produces inconsistent estimates of the effects of teacher characteristics on student achievement. Moreover, individual-specific heterogeneity is more appropriately captured by fixed effects than by random effects; the random effects estimator yields inconsistent parameter estimates and estimates of time-invariant teacher quality that diverge significantly from the fixed effects estimator. In contrast, the exclusion of peer characteristics and class size each hav