School district investments in general skills: The case of principal residency programs

Districts are investing more in school leadership, including the implementation of residency training programs for aspiring principals. There is limited evidence about the district return on these investments, and none in the context in which principal hiring is decentralized at the school level. This paper develops a model highlighting the conditions under which districts benefit from investments in general leadership skills and examines the residency program in the Chicago Public Schools (CPS). The event-study analysis that addresses treatment effect heterogeneity finds that principals who complete a residency are significantly more effective at raising achievement. Although the leadership skills gained through the residency are likely to make a principal more valuable to districts outside of CPS, the large majority of residents remain in CPS despite the absence of salary premia for completion of a residency or high performance. These findings suggest the presence of transition costs that enable CPS to retain more effective, residency-trained principals without having to increase pay, thereby realizing some of the return on the investment in general skills.