The Principal-Agent Relationship Of School

The school production problem is always an important subject of Economics of Education. Traditional researches stressed the ethical or technical factor, while neglecting the institutional factor, thus school seemed a "black-box" as a productive organization.Introducing Principal-Agent theory to school organization, studying the economic relationship and analyzing the nature of the school, uncovered the institutional characteristic of school production and management. School principal-agent relationship study threw light on the power characteristic of school organization, specialized the opportunism in school, explained the reason for low-efficiency of school production and management from the perspective of institution. From other point of view, school principal-agent relationship exists in the school organization, which inevitably leads to the opportunism and means school incentive problem. School incentive problem is that how school principal will devise and construct school incentive-restriction mechanism to reduce the opportunism of the school agent and reach the maximization of the interest in the asymmetric information.Based on the new studies of New Institutional Economics on institution and Firm theory, this paper brings toward the some thoughts and analytic framework. In the first part, school principal-agent relationship is on the basis of three theories: Property Rights theory; Contract of the Firm theory; Information Economics theory. Subsequently, the concept and meanings of school principal-agent relationship is given. In second part, the essentiality of school principal-agent relationship research is emphasized on both the recognition of school production function and the actual conditions of school management. The feasibility of school principal-agent relationship research is demonstrated on the hypothesis of school as "Economic Man", the characteristic of opportunism in school, and contractual characteristic of school. However, school principal-agent relationship exists all levels of the school,has definite characteristic, and corresponds with some manifestation, and leads to some problems, in the third part, the article discussed the characteristic and manifestation of school principal-agent relationship, analyzed the institutional and non- institutional reason. According to these problems and their causes, in connection with the actual situation, the article raises some measures to improve it: the devise of school property incentive mechanism, especially school ownership, is to solve the problem from external relationship of the school, while the construction of school's interior incentive-restriction mechanism, such as incentive contract, risk-sharing mechanism and school interior supervising mechanism, emphasizes the reasonable institution from the interior.