This study developed a systematic approach for examining effects of policy decisions on student outcomes and assessed collective bargaining's impact on public school effectiveness and cost. Teacher unions' influence was gauged by modelling the educational process and examining responses of teachers, students, and administrators to the education and bargaining environment. Data from over 200 districts indicate that unions alter the way schools are run. Unionized teachers teach smaller classes, rely more on traditional instruction, and spend slightly less time in instruction, but more time preparing. Nonetheless, the overall quality of education as measured by scores on standardized tests is about the same in union and nonunion districts. Bargaining does appear to reduce achievement gains slightly for atypical students because specialized instructors or modes of instruction are more common in nonunion districts. Bargaining also increases the cost of providing a given quantity and quality of education by about 15 percent. (Author/KS)