This paper examines the impact of teachers and schools on student achievement, using unique matched panel data from the Harvard/UTD Texas Schools Project. The study finds that teacher quality is the most significant factor influencing student achievement, accounting for at least 7.5 percent of the total variation in student achievement. While schools have a powerful effect on achievement differences, these effects are primarily due to variations in teacher quality. The analysis estimates educational production functions based on models of achievement growth with individual fixed effects, identifying a few systematic factors, such as the negative impact of initial years of teaching and the positive effect of smaller class sizes for low-income children in earlier grades. However, these effects are small compared to the effects of overall teacher quality differences. The study also finds that teacher quality differences are not easily measured by simple characteristics of teachers and classrooms. The results suggest that policy initiatives must account for the substantial heterogeneity of teachers, whether in effort or skill, to have a significant impact on students. The paper concludes that teacher quality is a critical factor in determining student achievement, and that policies should focus on improving teacher quality to enhance student outcomes.This paper examines the impact of teachers and schools on student achievement, using unique matched panel data from the Harvard/UTD Texas Schools Project. The study finds that teacher quality is the most significant factor influencing student achievement, accounting for at least 7.5 percent of the total variation in student achievement. While schools have a powerful effect on achievement differences, these effects are primarily due to variations in teacher quality. The analysis estimates educational production functions based on models of achievement growth with individual fixed effects, identifying a few systematic factors, such as the negative impact of initial years of teaching and the positive effect of smaller class sizes for low-income children in earlier grades. However, these effects are small compared to the effects of overall teacher quality differences. The study also finds that teacher quality differences are not easily measured by simple characteristics of teachers and classrooms. The results suggest that policy initiatives must account for the substantial heterogeneity of teachers, whether in effort or skill, to have a significant impact on students. The paper concludes that teacher quality is a critical factor in determining student achievement, and that policies should focus on improving teacher quality to enhance student outcomes.