This article investigates how community management of schools can affect educational outcomes as measured by retention rates. In our model, parents make decisions about whether or not their children should remain in school, and they monitor the performance of the teachers. We analyze a unique data set from El Salvador, which expanded the role of communities in school management through its Educación con Participación de la Comunidad (EDUCO) program. While we use nonrandomized data, we carefully examine biases arising from endogenous program placements and program self-selection. We find that EDUCO had a positive and robust influence on students, encouraging them to continue their schooling. Our results suggest that community participation, a better classroom environment, and careful teacher management are largely responsible for the positive effect of the EDUCO program. We conclude that in El Salvador the decentralization of responsibilities to communities seems to have had significant positive effects on school continuation.The paper (Economic Development and Cultural Change, Jan. 2014) is by Emmanuel Jimenez & Yasuyuki Sawada. A draft (2003) is here.