This paper analyses the relationship between teacher hiring practices and educational efficiency in Norwegian school districts. The hiring decision is made at the school level by the principal or at the school district level. According to the data, efficiency is the highest in districts where hiring is decentralized. Hiring practices are decided by the school district, and linear estimates of the effect of decentralized hiring on efficiency may be biased because of non-random selection. First, I approach this problem by including a large set of controls in a school district level analysis, which does not alter the qualitative result. Second, I perform a school level analysis with district fixed effects. The results indicate, as expected, that the effect of decentralization is stronger for schools facing excess teacher supply than for schools without excess supply. (Contains 1 figure and 4 tables.)