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Pay for Percentile

  • Gadi Barlevy
  • Derek Neal

We analyze an incentive pay scheme for educators that links educator compensation to the ranks of their students within appropriately defined comparison sets, and we show that under certain conditions this scheme induces teachers to allocate socially optimal levels of effort to all students. Moreover, because this scheme employs only ordinal information, it allows education authorities to employ completely new assessments at each testing date without ever having to equate various assessment forms. This approach removes incentives for teachers to teach to a particular assessment form and eliminates opportunities to influence reward pay by corrupting the equating process or the scales used to report assessment results. Education authorities can use the incentive scheme we describe while employing a separate no-stakes assessment system to track secular trends in scaled measures of student achievement.

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File URL: http://www.nber.org/papers/w17194.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17194.

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Date of creation: Jul 2011
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Publication status: published as Gadi Barlevy & Derek Neal, 2012. "Pay for Percentile," American Economic Review, American Economic Association, vol. 102(5), pages 1805-31, August.
Handle: RePEc:nbr:nberwo:17194
Note: ED LS
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  16. 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.
  17. John Cawley & James Heckman & Edward Vytlacil, 1999. "On Policies To Reward The Value Added By Educators," The Review of Economics and Statistics, MIT Press, vol. 81(4), pages 720-727, November.
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