Teacher Performance Pay: Experimental Evidence from India
Performance pay for teachers is frequently suggested as a way of improving education outcomes in schools, but the theoretical predictions regarding its effectiveness are ambiguous and the empirical evidence to date is limited and mixed. We present results from a randomized evaluation of a teacher incentive program implemented across a large representative sample of government-run rural primary schools in the Indian state of Andhra Pradesh. The program provided bonus payments to teachers based on the average improvement of their students' test scores in independently administered learning assessments (with a mean bonus of 3% of annual pay). At the end of two years of the program, students in incentive schools performed significantly better than those in control schools by 0.28 and 0.16 standard deviations in math and language tests respectively. They scored significantly higher on "conceptual" as well as "mechanical" components of the tests, suggesting that the gains in test scores represented an actual increase in learning outcomes. Incentive schools also performed better on subjects for which there were no incentives, suggesting positive spillovers. Group and individual incentive schools performed equally well in the first year of the program, but the individual incentive schools outperformed in the second year. Incentive schools performed significantly better than other randomly-chosen schools that received additional schooling inputs of a similar value.
We are grateful to Caroline Hoxby, Michael Kremer, and Michelle Riboud for their support, advice, and encouragement at all stages of this project. We thank George Baker, Efraim Benmelech, Eli Berman, Damon Clark, Julie Cullen, Gordon Dahl, Jishnu Das, Martin Feldstein, Richard Freeman, Robert Gibbons, Edward Glaeser, Roger Gordon, Gordon Hanson, Richard Holden, Asim Khwaja, David Levine, Jens Ludwig, Sendhil Mullainathan, Ben Olken, Lant Pritchett, Halsey Rogers, Richard Romano, Kartini Shastry, Jeff Williamson, and various seminar participants for useful comments and discussions. This paper is based on a project known as the Andhra Pradesh Randomized Evaluation Study (AP RESt), which is a partnership between the Government of Andhra Pradesh, the Azim Premji Foundation, and the World Bank. Financial assistance for the project has been provided by the Government of Andhra Pradesh, the UK Department for International Development (DFID), the Azim Premji Foundation, and the World Bank. We thank Dileep Ranjekar, Amit Dar, Samuel C. Carlson, and officials of the Department of School Education in Andhra Pradesh (particularly Dr. I.V. Subba Rao, Dr. P. Krishnaiah, K. Ramakrishna Rao, and Suresh Chanda), for their continuous support and long-term vision for this research. We are especially grateful to DD Karopady, M Srinivasa Rao, and staff of the Azim Premji Foundation for their leadership and meticulous work in implementing this project. Sridhar Rajagopalan, Vyjyanthi Shankar, and staff of Educational Initiatives led the test design. We thank Vinayak Alladi, Gokul Madhavan, Ketki Sheth and Maheshwor Shrestha for outstanding research assistance. The findings, interpretations, and conclusions expressed in this paper are those of the authors and do not necessarily represent the views of the World Bank, its Executive Directors, the governments they represent, or the National Bureau of Economic Research.
Karthik Muralidharan & Venkatesh Sundararaman, 2011. "Teacher Performance Pay: Experimental Evidence from India," Journal of Political Economy, University of Chicago Press, vol. 119(1), pages 39 - 77. citation courtesy of