Performance Pay and Teachers' Effort, Productivity, and Grading Ethics

Lavy, Victor

doi:10.1257/aer.99.5.1979

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American Economic Review: Vol. 99 No. 5 (December 2009)

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Performance Pay and Teachers' Effort, Productivity, and Grading Ethics

Article Citation

Lavy, Victor. 2009. "Performance Pay and Teachers' Effort, Productivity, and Grading Ethics." American Economic Review, 99(5): 1979-2011.

DOI: 10.1257/aer.99.5.1979

Abstract

This paper presents evidence about the effect of individual monetary incentives on English and math teachers in Israel. Teachers were rewarded with cash bonuses for improving their students' performance in high-school matriculation exams. The main identification strategy is based on measurement error in the assignment to treatment variable that produced a randomized treatment sample. The incentives led to significant improvements in test taking rates, conditional pass rates, and mean test scores. Improvements were mediated through changes in teaching methods, enhanced after-school teaching, and increased responsiveness to students' needs. No evidence was found of manipulation of test scores by teachers. (JEL I21, J31, J45)

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Authors

Lavy, Victor (Hebrew U Jerusalem and Royal Holloway, U London)

JEL Classifications

I21: Analysis of Education
J31: Wage Level and Structure; Wage Differentials
J45: Public Sector Labor Markets