TY  - JOUR
AU  - Lavy,Victor
TI  - Performance Pay and Teachers' Effort, Productivity and Grading Ethics
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10622
PY  - 2004
Y2  - July 2004
UR  - http://www.nber.org/papers/w10622
L1  - http://www.nber.org/papers/w10622.pdf
N1  - Author contact info:
Victor Lavy
Department of Economics
Hebrew University
Mount Scopus
91905 Israel
and Royal Holloway
University of London
Tel: 972-2-5883245
E-Mail: msvictor@mscc.huji.ac.il
AB  - Performance-related incentive pay for teachers is being introduced in many countries, but there is little evidence of its effects. This paper evaluates a rank-order tournament among teachers of English, Hebrew, and mathematics in Israel. Teachers were rewarded with cash bonuses for improving their students' performance on high-school matriculation exams. Two identification strategies were used to estimate the program effects, a regression discontinuity design and propensity score matching. The regression discontinuity method exploits both a natural experiment stemming from measurement error in the assignment variable and a sharp discontinuity in the assignment-to-treatment variable. The results suggest that performance incentives have a significant effect on directly affected students with some minor spillover effects on untreated subjects. The improvements appear to derive from changes in teaching methods, after-school teaching, and increased responsiveness to students' needs. No evidence found for teachers' manipulation of test scores. The program appears to have been more cost-effective than school-group cash bonuses or extra instruction time and is as effective as cash bonuses for students.
ER  -