Evaluating the Effect of Teachers' Performance Incentives on Pupil Achievement

Hebrew University Economics Working Paper No. 01-5

35 Pages Posted: 4 Nov 2001

See all articles by Victor Lavy

Victor Lavy

University of Warwick - Department of Economics; Hebrew University of Jerusalem - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Date Written: October 2001

Abstract

Proposals to use teachers' performance incentives as the basis for school reforms have recently attracted considerable attention and support among researchers and policy makers. The main message is that the most likely way to improve students' achievements is to institute performance incentives, direct monetary rewards for improvements in student outcomes. However, there has been very little experience with applying performance incentives in schools. This paper provides empirical evidence on the causal effect of a program that offered monetary incentives to teachers as a function of their students' achievements. The program offered incentives to schools in the form of performance awards, part of which were distributed to teachers and school staff as merit pay and the rest, for the well-being of teachers in the school. I evaluate the effect of the program during the first two full academic years of its implementation, 1996 and 1997. Since participating schools were not chosen randomly, the issue of identification is central to the empirical strategy. The second part of the paper evaluates the effect of a "twin" program, implemented simultaneously and with the same objectives as the incentive program, but in different schools, and based on providing additional resources to schools. The paper compares the effect and cost of the two alternative intervention strategies and draws policy implications.

Keywords: monetary incentives, school resources, rank order tournament, student achievements, causal identification

JEL Classification: I0, I2, J0, J3

Suggested Citation

Lavy, Victor, Evaluating the Effect of Teachers' Performance Incentives on Pupil Achievement (October 2001). Hebrew University Economics Working Paper No. 01-5. Available at SSRN: https://ssrn.com/abstract=288814 or http://dx.doi.org/10.2139/ssrn.288814

Victor Lavy (Contact Author)

University of Warwick - Department of Economics ( email )

Coventry CV4 7AL
United Kingdom

Hebrew University of Jerusalem - Department of Economics ( email )

Mount Scopus
Jerusalem, 91905
Israel
+972 2 588 3245 (Phone)
+972 2 581 6071 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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