Employee Evaluation and Skill Investments: Evidence from Public School Teachers
When an employee expects repeated evaluation and performance incentives over time, the potential future rewards create an incentive to invest in building relevant skills. Because new skills benefit job performance, the effects of an evaluation program can persist after the rewards end or even anticipate the start of rewards. I test for persistence and anticipation effects, along with more conventional predictions, using a quasi-experiment in Tennessee schools. Performance improves with new evaluation measures, but gains are larger when the teacher expects future rewards linked to future scores. Performance rises further when incentives start and remains higher even after incentives end.
Thanks to the Tennessee Department of Education and Tennessee Education Research Alliance for access to the data, and to the Spencer Foundation for financial support. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.