Rural America contributes greatly to the American Community, yet this population is often overlooked and underrepresented in most types of education literature. Choices about residence shape America’s public school system through the formation of school districts and schools associated with these local jurisdictions. Communities with different population densities may have different overall population composition and, therefore, may sort differently into schools. This paper examines the effect that population density, local jurisdictional sorting, homogeneity, peer characteristics, and community social capital may have on student achievement. The first part of this dissertation outlines the importance of rural research and the impact of rural education on all of America. These areas have different economies, opportunities, and peer composition than their non-rural counterparts. The statistically average person is different in rural and urban America. The second part discusses the theoretical implications of locale influence on educational attainment. This theory explains the possible causes of peer effect strength and provides a better predictive model of both rural and urban peer effects. I argue that some level of heterogeneity and high social capital foster strong peer effects, and there is a tradeoff between diverse student body composition and social capital. In the final portion of this dissertation, I explore student achievement using empirical analysis. Based on the analysis in Chapter 4, it appears that student achievement is impacted by peers with and without controlling for teacher effects and social capital (or type) of a locale without controlling for teacher effects. Chapter 5 examines peer effect differences by locale and finds differences in peer effect strength. Suburbs have significantly stronger classroom mean peer effects in elementary school than towns. Skewness influences appear to be the same across grades and locale, and social capital has a positive impact on student achievement in elementary school and a negative impact on student achievement in middle school. The analyses in Chapter 6 conclude that student achievement is impacted by both the average and the percentage of high and low achievers but not similarly by locale. The final chapter discusses the results and their implications for future research and for policy makers.

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Public K-12 education is a large enterprise in the United States. Through local, state and federal sources, the U.S. allocated over $610 billion to K-12 public education in 2009 (NCES). Not only is the commitment of public funds for education substantial, the provision of K-12 education is primarily administered by the government in non-market settings through local school districts. It is this institutional environment that generates the impetus for evaluating how those in education make choices in the absence of markets. Like traditional markets, non-market solutions often fail because the incentives facing individuals and agencies elicit choices which produce outcomes that are divergent from those which could be considered Pareto optimal. Examining these incentives and the resulting choices allows researchers to identify unintended consequences of policy and better inform policy design and reform. This dissertation endeavors to identify some of these incentives and to empirically examine their effects on the choices made by teachers and administrators. Chapter two recognizes that teaching effectiveness may motivate teacher choice into relatively more rigorous professional development. The empirical results suggest that teachers with a past history of relative ineffectiveness are selecting into the professional development program examined. The subsequent effectiveness of the in-service training is mixed. High stakes testing and school accountability are an increasing part of our K-12 education system. Chapter three acknowledges it is plausible that administrators may choose to place more students into class rooms of more effective teachers to maximize school performance. However, because of tenure and salary constraints they may choose to place fewer students into the class rooms of more effective teachers to reward their performance. Results overall indicate that more effective teachers have larger classes. Chapter four examines school district budget uncertainty and its relation to contingency funds. The institutional ambiguity of the definition of contingency funds allows a significant amount of choice for administrators to determine fund size and use. This chapter finds that administrators may be less sensitive to budget uncertainty and more responsive to the desire for budget fungibility. This dissertation concludes by addressing implications and future research.