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Teacher Incentives

  • Jaag, Christian

This paper considers hidden teacher effort in educational production and discusses the implications of multiple teacher effort dimensions on optimum incentive contracts in a theoretical framework. The analysis of educational production in a multitask framework is a new and unique contribution of this paper to the economics of education. We first characterize the first-best and second-best outcomes. The model is extended to address specific questions concerning teacher incentive schemes: We compare input- to output-based accountability measures and study the implication of the level of aggregation in performance measures. Against the background of the empirical evidence on the effectiveness of teacher incentives, we argue that performance measures should be as broad as possible. Further, we present the optimum contract for motivated teachers. Finally, if education is produced in teacher teams, we establish the conditions for optimum team-based and individual incentives: The larger the spillover effects across teacher efforts and the better the measurability of educational achievement, the stronger the case for team-based incentives.

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File URL: http://mpra.ub.uni-muenchen.de/340/1/MPRA_paper_340.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 340.

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Date of creation: 2006
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Handle: RePEc:pra:mprapa:340
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  1. Edward P. Lazear, 1999. "Output-based Pay: Incentives or Sorting?," NBER Working Papers 7419, National Bureau of Economic Research, Inc.
  2. Macho-Stadler, Ines & Perez-Castrillo, J. David, 2001. "An Introduction to the Economics of Information: Incentives and Contracts," OUP Catalogue, Oxford University Press, edition 2, number 9780199243259, March.
  3. Hendrik Jürges & Wolfram F. Richter & Kerstin Schneider, 2005. "Teacher Quality and Incentives: Theoretical and Empirical Effects of Standards on Teacher Quality," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 61(3), pages 298-, November.
  4. Ladd, Helen F., 1996. "The Dallas School Accountability and Incentive Program: An Evaluation of Its Impacts on Student Outcomes," Working Papers 96-18, Duke University, Department of Economics.
  5. Thomas J. Kane & Douglas O. Staiger, 2001. "Improving School Accountability Measures," NBER Working Papers 8156, National Bureau of Economic Research, Inc.
  6. Rogerson, William P, 1985. "The First-Order Approach to Principal-Agent Problems," Econometrica, Econometric Society, vol. 53(6), pages 1357-67, November.
  7. Canice Prendergast, 2000. "What Trade-Off of Risk and Incentives?," American Economic Review, American Economic Association, vol. 90(2), pages 421-425, May.
  8. Paul Glewwe & Nauman Ilias & Michael Kremer, 2003. "Teacher Incentives," NBER Working Papers 9671, National Bureau of Economic Research, Inc.
  9. Fehr, Ernst & Schmidt, Klaus M., 2004. "Fairness and Incentives in a Multi-Task Principle-Agent Model," CEPR Discussion Papers 4464, C.E.P.R. Discussion Papers.
  10. Richards, Craig E. & Sheu, Tian Ming, 1992. "The South Carolina school incentive reward program: A policy analysis," Economics of Education Review, Elsevier, vol. 11(1), pages 71-86, March.
  11. Randall Eberts & Kevin Hollenbeck & Joe Stone, 2000. "Teacher Performance Incentives and Student Outcomes," Upjohn Working Papers and Journal Articles 00-65, W.E. Upjohn Institute for Employment Research.
  12. Eric A. Hanushek & Margaret E. Raymond, 2004. "Does School Accountability Lead to Improved Student Performance?," NBER Working Papers 10591, National Bureau of Economic Research, Inc.
  13. Bengt Holmstrom & Paul R. Milgrom, 1985. "Aggregation and Linearity in the Provision of Intertemporal Incentives," Cowles Foundation Discussion Papers 742, Cowles Foundation for Research in Economics, Yale University.
  14. George Baker, 2002. "Distortion and Risk in Optimal Incentive Contracts," Journal of Human Resources, University of Wisconsin Press, vol. 37(4), pages 728-751.
  15. Brian A. Jacob, 2002. "Accountability, Incentives and Behavior: The Impact of High-Stakes Testing in the Chicago Public Schools," NBER Working Papers 8968, National Bureau of Economic Research, Inc.
  16. 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.
  17. Daniel M. Koretz, 2002. "Limitations in the Use of Achievement Tests as Measures of Educators' Productivity," Journal of Human Resources, University of Wisconsin Press, vol. 37(4), pages 752-777.
  18. Christian Jaag, 2005. "Hidden Teacher Effort in Educational Production: Monitoring vs. Merit Pay," HEW 0503003, EconWPA.
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