Working Paper: CEPR ID: DP3862
Authors: Victor Lavy
Abstract: Performance-related pay for teachers is being introduced in many countries, but there is little evaluation to date on the effects of such programmes. This Paper evaluates a particular incentive experiment. The incentive program is a rank-order tournament among teachers of English, Hebrew, and mathematics. Teachers were rewarded with cash bonuses for improvements in their students? performance on high-school matriculation exams. Since the schools in the programme were not selected at random, the evaluation is based on comparison groups. Three alternative identification strategies are used to estimate the causal effect of the programme: a natural experiment stemming from measurement error in the assignment variable, a regression discontinuity method, and propensity score matching. The results of all three methods tell a consistent story: teachers? monetary performance incentives have a significant effect on students? achievements in English and math. No spillover effect on untreated subjects is evident and the general equilibrium impact of the programme is positive as well. The programme is also more cost-effective than alternative forms of intervention such as extra instruction time and is as effective as cash bonuses for students.
Keywords: students achievement; teachers incentives
JEL Codes: I21; I28; J13; J24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Teachers' financial incentives program (M52) | Teacher effort (D29) |
| Teachers' financial incentives program (M52) | Changes in teaching methods (A21) |
| Teachers' financial incentives program (M52) | No spillover effects on untreated subjects (C92) |
| Teachers' financial incentives program (M52) | Cost-effectiveness compared to other interventions (H43) |
| Teachers' financial incentives program (M52) | Students' academic outcomes (I21) |