Adjusting for measurement error in the value added model: evidence from Portugal

The multilevel value added approach to measuring school effectiveness is now widely used. We propose a method to adjust for measurement error to investigate the extent to which this changes school effect estimates. It is applied to longitudinal data collected in the region of Cova da Beira (NUT III) for 1st, 3rd, 5th, 7th and 8th grades. Three different variance component models are considered, depending on the predictor variables included. Assuming measurement error occurs in explanatory and/or response variables, corrections are made for different values of the coefficient of reliability. Moreover, models are fitted under the assumption of either independent or correlated measurement errors.