Promotion Incentives in the Public Sector: Evidence from Chinese Schools

60 Pages Posted: 19 May 2015

See all articles by Naureen Karachiwalla

Naureen Karachiwalla

International Food Policy Research Institute (IFPRI)

Albert Park

Hong Kong University of Science & Technology (HKUST); Hong Kong University of Science & Technology (HKUST) - HKUST Institute for Emerging Market Studies (IEMS)

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Date Written: February 1, 2015

Abstract

We provide the first evidence that promotion incentives can influence effort of employees in the public sector by studying China’s system of annual evaluations and promotions for teachers. Theoretical predictions from a tournament model of promotion incentives are tested using panel data on primary and middle school teachers in western China. Consistent with theory, we find that promotions are associated with significant wage increases, that higher wage increases are associated with higher effort, that teachers increase effort in the years leading up to promotion eligibility but reduce effort if they are repeatedly passed over for promotion, and that increasing the number of competitors reduces the relative performance of those at the extremes of the skill distribution. Evaluation scores are positively associated with time spent on teaching and with student test scores, diminishing concerns that evaluations are manipulated.

Keywords: teacher incentives, promotions, China

JEL Classification: J31, J33, J45, M51

Suggested Citation

Karachiwalla, Naureen and Park, Albert, Promotion Incentives in the Public Sector: Evidence from Chinese Schools (February 1, 2015). HKUST IEMS Working Paper No. 2015-09, Available at SSRN: https://ssrn.com/abstract=2607424 or http://dx.doi.org/10.2139/ssrn.2607424

Naureen Karachiwalla

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

Albert Park (Contact Author)

Hong Kong University of Science & Technology (HKUST) ( email )

Clearwater Bay
Kowloon, 999999
Hong Kong

Hong Kong University of Science & Technology (HKUST) - HKUST Institute for Emerging Market Studies (IEMS) ( email )

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Lee Shau Kee Campus, HKUST
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Hong Kong

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