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Teacher Performance Incentives and Student Outcomes

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This paper reviews the evidence on the effectiveness of individual merit pay systems for teachers on student achievement, and it presents new empirical results based on a system established within a collective bargaining environment. While many merit pay systems have been established in school districts across the U.S., very little empirical evidence concerning their influence on student achievement exists. A natural experiment arose in a county in which one high school piloted a merit pay system that rewarded student retention and student evaluations of teachers while another comparable high school maintained a traditional compensation system. A difference-in-differences analysis implies that this system had no effect on grade point averages, reduced the percentage of students who dropped out of courses, reduced average daily attendance, and increased the percentage of students who failed. The outcomes of this merit pay system illustrate the difficulty of instituting such a compensation system in schools. The goal of the system was to increase student retention. A student was considered to be retained in a class if the student was present during a randomly selected day of the last week of classes. The system "worked" by this measure because the school experienced a significant reduction in course noncompleters. However it is not clear that this measure was correlated with student achievement or even average attendance, and indeed, neither of these outcomes were improved.

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Paper provided by W.E. Upjohn Institute for Employment Research in its series Upjohn Working Papers and Journal Articles with number rwekhjs2002.

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Handle: RePEc:upj:weupjo:rwekhjs2002

Note: Appears in Journal of Human Resouorces 37(4): 913-927
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Keywords: EDUCATION and TRAINING; K-12 Education; Teachers and compensation;

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References

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  1. Eberts, Randall W & Stone, Joe A, 1991. "Unionization and Cost of Production: Compensation, Productivity, and Factor-Use Effects," Journal of Labor Economics, University of Chicago Press, vol. 9(2), pages 171-85, April.
  2. Hoxby, Caroline Minter, 1996. "How Teachers' Unions Affect Education Production," The Quarterly Journal of Economics, MIT Press, vol. 111(3), pages 671-718, August.
  3. Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 7-63, March.
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Cited by:
  1. Jones, Michael D., 2012. "Teacher Behavior under Performance Pay Incentives," MPRA Paper 43892, University Library of Munich, Germany.
  2. Jaag, Christian, 2006. "Teacher Incentives," MPRA Paper 340, University Library of Munich, Germany.
  3. Figlio, David N. & Kenny, Lawrence W., 2007. "Individual teacher incentives and student performance," Journal of Public Economics, Elsevier, vol. 91(5-6), pages 901-914, June.
  4. Atkinson, Adele & Burgess, Simon & Croxson, Bronwyn & Gregg, Paul & Propper, Carol & Slater, Helen & Wilson, Deborah, 2009. "Evaluating the impact of performance-related pay for teachers in England," Labour Economics, Elsevier, vol. 16(3), pages 251-261, June.
  5. Vikström, Johan, 2009. "Cluster sample inference using sensitivity analysis: the case with few groups," Working Paper Series 2009:15, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  6. Heutel, Garth, 2009. "Testing implications of a tournament model of school district salary schedules," Economics of Education Review, Elsevier, vol. 28(1), pages 143-151, February.
  7. Hasnain, Zahid & Manning, Nick & Pierskalla Henryk, 2012. "Performance-related pay in the public sector : a review of theory and evidence," Policy Research Working Paper Series 6043, The World Bank.
  8. Mitnik, Oscar A., 2009. "How Do Training Programs Assign Participants to Training? Characterizing the Assignment Rules of Government Agencies for Welfare-to-Work Programs in California," IZA Discussion Papers 4024, Institute for the Study of Labor (IZA).
  9. Jones, Michael D., 2013. "Teacher behavior under performance pay incentives," Economics of Education Review, Elsevier, vol. 37(C), pages 148-164.
  10. Casey Ichniowski & Kathryn L. Shaw, 2009. "Insider Econometrics: Empirical Studies of How Management Matters," NBER Working Papers 15618, National Bureau of Economic Research, Inc.
  11. Emiliana Vegas & Ilana Umansky, 2005. "Improving Teaching and Learning through Effective Incentives : What Can We Learn from Education Reforms in Latin America?," World Bank Other Operational Studies 8694, The World Bank.
  12. Christian Jaag, 2005. "Hidden Teacher Effort in Educational Production: Monitoring vs. Merit Pay," HEW 0503003, EconWPA.
  13. Martin, Stephanie M., 2010. "The determinants of school district salary incentives: An empirical analysis of, where and why," Economics of Education Review, Elsevier, vol. 29(6), pages 1143-1153, December.
  14. Shaw, Kathryn, 2009. "Insider econometrics: A roadmap with stops along the way," Labour Economics, Elsevier, vol. 16(6), pages 607-617, December.
  15. Christoph Helbach & Klemens Keldenich, 2012. "Teaching in the Lab: Financial Incentives in the Education Process," Ruhr Economic Papers 0328, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  16. Marcello Sartarelli, 2011. "Do Performance Targets Affect Behaviour? Evidence from Discontinuities in Test Scores in England," DoQSS Working Papers 11-02, Department of Quantitative Social Science - Institute of Education, University of London.
  17. Christoph Helbach, 2012. "The Interplay of Standardized Tests and Incentives – An Econometric Analysis with Data from PISA 2000 and PISA 2009," Ruhr Economic Papers 0356, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.

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