Performance-related incentive pay for teachers is being introduced in many countries, but there is little evidence of its effects. This paper evaluates a rank-order tournament among teachers of English, Hebrew, and mathematics in Israel. Teachers were rewarded with cash bonuses for improving their students' performance on high-school matriculation exams. Two identification strategies were used to estimate the program effects, a regression discontinuity design and propensity score matching. The regression discontinuity method exploits both a natural experiment stemming from measurement error in the assignment variable and a sharp discontinuity in the assignment-to-treatment variable. The results suggest that performance incentives have a significant effect on directly affected students with some minor spillover effects on untreated subjects. The improvements appear to derive from changes in teaching methods, after-school teaching, and increased responsiveness to students' needs. No evidence found for teachers' manipulation of test scores. The program appears to have been more cost-effective than school-group cash bonuses or extra instruction time and is as effective as cash bonuses for students.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
10622.
Length: Date of creation: Jul 2004 Date of revision: Handle: RePEc:nbr:nberwo:10622
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Find related papers by JEL classification: I21 - Health, Education, and Welfare - - Education - - - Analysis of Education J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
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Paul Glewwe & Nauman Ilias & Michael Kremer, 2003.
"Teacher Incentives,"
NBER Working Papers
9671, National Bureau of Economic Research, Inc.
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Hanushek, Eric A., 2002.
"Publicly provided education,"
Handbook of Public Economics,
in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 30, pages 2045-2141
Elsevier.
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