IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/16710.html
   My bibliography  Save this paper

The Design of Performance Pay in Education

Author

Listed:
  • Derek Neal

Abstract

This chapter analyzes the design of incentive schemes in education while reviewing empirical studies that evaluate performance pay programs for educators. Several themes emerge. First, it is difficult to use one assessment system to create both educator performance metrics and measures of student achievement. To mitigate incentives for coaching, incentive systems should employ assessments that vary in both format and item content. Separate no-stakes assessments provide more reliable information about student achievement because they create no incentives for educators to take hidden actions that contaminate student test scores. Second, relative performance schemes are rare in education even though they are more difficult to manipulate than systems built around psychometric or subjective performance standards. Third, assessment-based incentive schemes are mechanisms that complement rather than substitute for systems that promote parental choice, e.g. vouchers and charter schools.

Suggested Citation

  • Derek Neal, 2011. "The Design of Performance Pay in Education," NBER Working Papers 16710, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:16710
    Note: ED LS
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w16710.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jesse Rothstein, 2010. "Teacher Quality in Educational Production: Tracking, Decay, and Student Achievement," The Quarterly Journal of Economics, Oxford University Press, vol. 125(1), pages 175-214.
    2. Joshua Angrist & Eric Bettinger & Michael Kremer, 2004. "Long-Term Consequences of Secondary School Vouchers: Evidence from Administrative Records in Colombia," NBER Working Papers 10713, National Bureau of Economic Research, Inc.
    3. Victor Lavy, 2009. "Performance Pay and Teachers' Effort, Productivity, and Grading Ethics," American Economic Review, American Economic Association, vol. 99(5), pages 1979-2011, December.
    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. Lisa Barrow & Cecilia Elena Rouse, 2008. "School vouchers and student achievement: recent evidence, remaining questions," Working Paper Series WP-08-08, Federal Reserve Bank of Chicago.
    6. Gadi Barlevy & Derek Neal, 2012. "Pay for Percentile," American Economic Review, American Economic Association, vol. 102(5), pages 1805-1831, August.
    7. Flavio Cunha & James J. Heckman & Susanne M. Schennach, 2010. "Estimating the Technology of Cognitive and Noncognitive Skill Formation," Econometrica, Econometric Society, vol. 78(3), pages 883-931, May.
    8. Julie Berry Cullen & Randall Reback, 2006. "Tinkering Toward Accolades: School Gaming Under a Performance Accountability System," NBER Working Papers 12286, National Bureau of Economic Research, Inc.
    9. Figlio, David & Loeb, Susanna, 2011. "School Accountability," Handbook of the Economics of Education, in: Erik Hanushek & Stephen Machin & Ludger Woessmann (ed.), Handbook of the Economics of Education, edition 1, volume 3, chapter 8, pages 383-421, Elsevier.
    10. Dale Ballou & Michael Podgursky, 1996. "Teacher Pay and Teacher Quality," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number tptq.
    11. Ladd, Helen F., 1999. "The Dallas school accountability and incentive program: an evaluation of its impacts on student outcomes," Economics of Education Review, Elsevier, vol. 18(1), pages 1-16, February.
    12. Karthik Muralidharan & Venkatesh Sundararaman, 2011. "Teacher Performance Pay: Experimental Evidence from India," Journal of Political Economy, University of Chicago Press, vol. 119(1), pages 39-77.
    13. Charles T. Clotfelter & Helen F. Ladd & Jacob L. Vigdor & Roger Aliaga Diaz, 2004. "Do school accountability systems make it more difficult for low-performing schools to attract and retain high-quality teachers?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 23(2), pages 251-271.
    14. Victor Lavy, 2002. "Evaluating the Effect of Teachers' Group Performance Incentives on Pupil Achievement," Journal of Political Economy, University of Chicago Press, vol. 110(6), pages 1286-1317, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Murphy, Richard & Weinhardt, Felix & Wyness, Gill, 2021. "Who teaches the teachers? A RCT of peer-to-peer observation and feedback in 181 schools," Economics of Education Review, Elsevier, vol. 82(C).
    2. Jones, Michael D., 2013. "Teacher behavior under performance pay incentives," Economics of Education Review, Elsevier, vol. 37(C), pages 148-164.
    3. Barrera-Osorio, Felipe & Raju, Dhushyanth, 2017. "Teacher performance pay: Experimental evidence from Pakistan," Journal of Public Economics, Elsevier, vol. 148(C), pages 75-91.
    4. Roland G. Fryer, Jr & Steven D. Levitt & John List & Sally Sadoff, 2012. "Enhancing the Efficacy of Teacher Incentives through Loss Aversion: A Field Experiment," NBER Working Papers 18237, National Bureau of Economic Research, Inc.
    5. Norton, Edward C. & Li, Jun & Das, Anup & Chen, Lena M., 2018. "Moneyball in Medicare," Journal of Health Economics, Elsevier, vol. 61(C), pages 259-273.
    6. Pope, Nolan G., 2019. "The effect of teacher ratings on teacher performance," Journal of Public Economics, Elsevier, vol. 172(C), pages 84-110.
    7. Jalava, Nina & Joensen, Juanna Schrøter & Pellas, Elin, 2015. "Grades and rank: Impacts of non-financial incentives on test performance," Journal of Economic Behavior & Organization, Elsevier, vol. 115(C), pages 161-196.
    8. Biasi, Barbara & Sarsons, Heather, 2020. "Flexible Wages, Bargaining, and the Gender Gap," IZA Discussion Papers 13754, Institute of Labor Economics (IZA).
    9. Hanushek, Eric A. & Woessmann, Ludger, 2011. "Overview of the symposium on performance pay for teachers," Economics of Education Review, Elsevier, vol. 30(3), pages 391-393, June.
    10. Roland G. Fryer, 2011. "Teacher Incentives and Student Achievement: Evidence from New York City Public Schools," NBER Working Papers 16850, National Bureau of Economic Research, Inc.
    11. de Hoyos, Rafael & Estrada, Ricardo & Vargas, María José, 2021. "What do test scores really capture? Evidence from a large-scale student assessment in Mexico," World Development, Elsevier, vol. 146(C).
    12. Woo, Seokjin & Lee, Soohyung & Kim, Kyunghee, 2015. "Carrot and stick?: Impact of a low-stakes school accountability program on student achievement," Economics Letters, Elsevier, vol. 137(C), pages 195-199.
    13. Chang, Fang & Wang, Huan & Qu, Yaqiong & Zheng, Qiang & Loyalka, Prashant & Sylvia, Sean & Shi, Yaojiang & Dill, Sarah-Eve & Rozelle, Scott, 2020. "The impact of pay-for-percentile incentive on low-achieving students in rural China," Economics of Education Review, Elsevier, vol. 75(C).
    14. Lockheed, Marlaine E., 2014. "Teacher opinions on performance incentives : evidence from the Kyrgyz Republic," Policy Research Working Paper Series 6752, The World Bank.
    15. Brehm, Margaret & Imberman, Scott A. & Lovenheim, Michael F., 2017. "Achievement effects of individual performance incentives in a teacher merit pay tournament," Labour Economics, Elsevier, vol. 44(C), pages 133-150.
    16. Ferreyra, Maria Marta & Liang, Pierre Jinghong, 2012. "Information asymmetry and equilibrium monitoring in education," Journal of Public Economics, Elsevier, vol. 96(1), pages 237-254.
    17. Koch, Alexander & Nafziger, Julia & Nielsen, Helena Skyt, 2015. "Behavioral economics of education," Journal of Economic Behavior & Organization, Elsevier, vol. 115(C), pages 3-17.
    18. Martorell, Paco & Miller, Trey & Santibañez, Lucrecia & Augustine, Catherine H., 2016. "Can incentives for parents and students change educational inputs? Experimental evidence from summer school," Economics of Education Review, Elsevier, vol. 50(C), pages 113-126.
    19. Dhushyanth Raju, 2017. "Public School Teacher Management in Sri Lanka," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 18(1), pages 39-63, March.
    20. Yeşilırmak, Muharrem, 2019. "Bonus pay for teachers, spatial sorting, and student achievement," European Journal of Political Economy, Elsevier, vol. 59(C), pages 129-158.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hanushek, Eric A., 2011. "The economic value of higher teacher quality," Economics of Education Review, Elsevier, vol. 30(3), pages 466-479, June.
    2. Samuel Berlinski & Norbert Schady, 2015. "Daycare Services: It’s All about Quality," Palgrave Macmillan Books, in: Samuel Berlinski & Norbert Schady (ed.), The Early Years, chapter 4, pages 91-119, Palgrave Macmillan.
    3. M. Caridad Araujo & Yyannu Cruz-Aguayo & Analia Jaimovich & Sharon Lynn Kagan, 2015. "Drawing Up an Institutional Architecture," IDB Publications (Book Chapters), in: Samuel Berlinski & Norbert Schady (ed.), The Early Years: Child Well-Being and the Role of Public Policy, edition 1, chapter 7, pages 179-202, Inter-American Development Bank.
    4. Karthik Muralidharan & Venkatesh Sundararaman, 2011. "Teacher Performance Pay: Experimental Evidence from India," Journal of Political Economy, University of Chicago Press, vol. 119(1), pages 39-77.
    5. Scott A. Imberman, 2015. "How effective are financial incentives for teachers?," IZA World of Labor, Institute of Labor Economics (IZA), pages 158-158, June.
    6. Muralidharan, Karthik & Sundararaman, Venkatesh, 2011. "Teacher opinions on performance pay: Evidence from India," Economics of Education Review, Elsevier, vol. 30(3), pages 394-403, June.
    7. Gadi Barlevy & Derek Neal, 2012. "Pay for Percentile," American Economic Review, American Economic Association, vol. 102(5), pages 1805-1831, August.
    8. Victor Lavy, 2009. "Performance Pay and Teachers' Effort, Productivity, and Grading Ethics," American Economic Review, American Economic Association, vol. 99(5), pages 1979-2011, December.
    9. Andrea Lepine, 2016. "Teacher Incentives and Student Performance: Evidence from Brazil," Working Papers, Department of Economics 2016_18, University of São Paulo (FEA-USP).
    10. Emiliana Vegas & Ilana Umansky, . "Improving Teaching and Learning through Effective Incentives : What Can We Learn from Education Reforms in Latin America?," World Bank Other Operational Studies, The World Bank, number 8694.
    11. Seth Gershenson, 2016. "Performance Standards and Employee Effort: Evidence From Teacher Absences," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 35(3), pages 615-638, June.
    12. Bourdon, Jean & Frölich, Markus & Michaelowa, Katharina, 2007. "Teacher Shortages, Teacher Contracts and their Impact on Education in Africa," IZA Discussion Papers 2844, Institute of Labor Economics (IZA).
    13. Balch, Ryan & Springer, Matthew G., 2015. "Performance pay, test scores, and student learning objectives," Economics of Education Review, Elsevier, vol. 44(C), pages 114-125.
    14. Vegas, Emiliana & Ganimian, Alejandro, 2018. "Theory and Evidence on Teacher Policies in Developed and Developing Countries," IDB Publications (Working Papers) 4597, Inter-American Development Bank.
    15. Ludger Wößmann, 2006. "Bildungspolitische Lehren aus den internationalen Schülertests: Wettbewerb, Autonomie und externe Leistungsüberprüfung," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 7(3), pages 417-444, August.
    16. 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.
    17. Jones, Michael D., 2013. "Teacher behavior under performance pay incentives," Economics of Education Review, Elsevier, vol. 37(C), pages 148-164.
    18. Woessmann, Ludger, 2011. "Cross-country evidence on teacher performance pay," Economics of Education Review, Elsevier, vol. 30(3), pages 404-418, June.
    19. Ludger Wößmann, 2008. "Efficiency and equity of European education and training policies," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 15(2), pages 199-230, April.
    20. Gershenson, Seth & Holt, Stephen B. & Papageorge, Nicholas W., 2015. "Who Believes in Me? The Effect of Student-Teacher Demographic Match on Teacher Expectations," IZA Discussion Papers 9202, Institute of Labor Economics (IZA).

    More about this item

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:16710. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.