Pay by Design: Teacher Performance Pay Design and the Distribution of Student Achievement

47 Pages Posted: 7 May 2016 Last revised: 26 Dec 2016

See all articles by Prashant Kumar Loyalka

Prashant Kumar Loyalka

Stanford University - Freeman Spogli Institute for International Studies

Sean Sylvia

Renmin University of China - School of Economics

Chengfang Liu

Chinese Academy of Sciences (CAS)

James Chu

Stanford University, Department of Sociology, Students; Stanford University - Freeman Spogli Institute for International Studies

Yaojiang Shi

Shaanxi Normal University

Date Written: October 16, 2016

Abstract

We present results of a randomized trial testing alternative approaches of mapping student achievement into rewards for teachers. Teachers in 216 schools in western China were assigned to performance pay schemes where teacher performance was assessed by one of three different methods. We find that teachers offered “pay-for-percentile” incentives (Barlevy and Neal 2012) outperform teachers offered simpler schemes based on class average achievement or average gains over a school year. Moreover, pay-for-percentile incentives produced broad-based gains across students within classes. That teachers respond to relatively intricate features of incentive schemes highlights the importance of close attention to performance pay design.

Keywords: Teacher Performance Pay, Incentive Design, Distributional Effects

JEL Classification: I21, J33, M52

Suggested Citation

Loyalka, Prashant and Sylvia, Sean and Liu, Chengfang and Chu, James and Shi, Yaojiang, Pay by Design: Teacher Performance Pay Design and the Distribution of Student Achievement (October 16, 2016). Available at SSRN: https://ssrn.com/abstract=2775461 or http://dx.doi.org/10.2139/ssrn.2775461

Prashant Loyalka

Stanford University - Freeman Spogli Institute for International Studies ( email )

Stanford, CA 94305
United States

Sean Sylvia (Contact Author)

Renmin University of China - School of Economics ( email )

No. 59, Zhongguancun Street
Beijing, Beijing 100080
China

Chengfang Liu

Chinese Academy of Sciences (CAS) ( email )

52 Sanlihe Rd.
Datun Road, Anwai
Beijing, Xicheng District 100864
China

James Chu

Stanford University, Department of Sociology, Students ( email )

Stanford
United States

Stanford University - Freeman Spogli Institute for International Studies ( email )

Stanford, CA 94305
United States

Yaojiang Shi

Shaanxi Normal University ( email )

Chang'an Chang'an District
199 South Road
Xi'an, Shaanxi Province 710062
China

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