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Teacher Behavior under Performance Pay Incentives

  • Jones, Michael D.

Over the last decade many districts have implemented performance pay incentives to reward teachers for improving student test scores. Economic theory suggests that these programs could alter teacher work effort, cooperation, and retention. Because teachers can choose to work in a performance pay district that has characteristics correlated with teacher behavior, I use the distance between a teacher’s undergraduate institution and the nearest performance pay district as an instrumental variable. Using data from the 2003 and 2007 waves of the Schools and Staffing Survey (SASS), I find that teachers respond to performance pay incentives by working fewer hours per week at school. Performance pay also decreases participation in unpaid cooperative school activities, while there is suggestive evidence that teacher turnover decreases. The treatment effects are heterogeneous; male teachers respond more positively to performance pay than female teachers. In Florida, which restricts state performance pay funding to individual teachers or teams, I find that work effort and teacher turnover increase.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 43892.

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Date of creation: 25 Apr 2012
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Handle: RePEc:pra:mprapa:43892
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  18. Jonah E. Rockoff, 2004. "The Impact of Individual Teachers on Student Achievement: Evidence from Panel Data," American Economic Review, American Economic Association, vol. 94(2), pages 247-252, May.
  19. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," Journal of Law, Economics and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
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  24. Derek Neal, 2011. "The Design of Performance Pay in Education," NBER Working Papers 16710, National Bureau of Economic Research, Inc.
  25. Dale Ballou & Michael Podgursky, 1993. "Teachers' Attitudes toward Merit Pay: Examining Conventional Wisdom," ILR Review, Cornell University, ILR School, vol. 47(1), pages 50-61, October.
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  29. Barton H. Hamilton & Jack A. Nickerson & Hideo Owan, 2003. "Team Incentives and Worker Heterogeneity: An Empirical Analysis of the Impact of Teams on Productivity and Participation," Journal of Political Economy, University of Chicago Press, vol. 111(3), pages 465-497, June.
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