Page 5 meant to proxy for similar school, household or community characteristics and that appear highly correlated.

14. Part II presents indicators drawn from the school stakeholder survey in Albania that have been previously associated with school performance in other countries. The second part of the report starts by motivating the indicators selected from the survey with a review of the empirical literature that uses the “ _education production function_ ” as its analytical foundation. Disparities in key “inputs” and “outputs” across schools are then presented, and with the important caveats above about the limitations of what can be concluded from retrospective data, statistically significant associations are discussed. Students‟ performance on final year exams, repetition rates, and dropout rates are examined in relation to indicators of school resources (physical and human); teacher effort; parent and community characteristics that shape the context in which students learn; as well as “top down” and “bottom up” accountability structures.

15. Part III delves deeper into the role of local participatory governance structures and parents‟ demand for accountability in school performance **.** As discussed previously, better school performance can depend on parents holding teachers accountable through participatory structures. But even where these structures are in place, they are vulnerable to lack of parent capacity and capture by better informed teachers and school principals. Parent involvement depends on awareness of these institutions, and _their willingness_ to actively participate to try and keep teachers accountable. For this reason, parents‟ demand for accountability is critical. However, it is difficult to measure parent demand for accountability with only _subjective data_ on perceptions about problems in schools, _attitudinal data_ about how things ought to be changed, or _aspirational data_ about their willingness to do something about it. Techniques from experimental economics can overcome these limitations by drawing robust measures of demand for accountability that corroborate the subjective, attitudinal, and aspirational data from surveys. In Part III, the results from lab-type, controlled field experiments conducted with parents and teachers, are combined with survey data to investigate how parents‟ demand for accountability relate to their observable characteristics, such as education, income, occupation; existing school-level institutions for participatory accountability; parents‟ information about such institutions; and parents‟ actual involvement in the school.

# **_1.c.1 Significant variations in performance and resources across Albania’s school_** _s_

16. Starting with school performance, the survey results show that schools in urban locations appear to outperform schools in rural locations in students‟ achievement in their final exams. The data discussed in this section are presented in Tables 1-7 of Part II. Overall, the proportion of students who do extremely well in math was generally low and especially low in rural areas, where only 6 percent of the students who took the 2009 leaving examination earned a 9 or a 10. The dropout rate was significantly higher in rural locations. Conversely, schools in urban areas showed higher repetition rates (although the difference is not statistically significant).

17. Differences in student and school performance could reflect the wide disparities in physical and human resources found in the survey. Almost all schools in the sample reported problems of poor facilities and infrastructure. On average, as reported in the survey, 95 percent of the classrooms in the surveyed schools could not be used in poor weather conditions, and schools suffered power shortages for about four days in a typical month. Schools in rural locations were significantly smaller, more likely not to have a phone, to experience power shortages, and not to have a library. As for human resources, the student-teacher ratio was higher in urban locations, although more variation was found in rural schools, where there were up to 62 students per teacher. Teachers in urban schools had achieved higher levels of education and were more experienced; they