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Achievement Effects of Individual Performance Incentives in a Teacher Merit Pay Tournament

Author

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  • Margaret Brehm
  • Scott A. Imberman
  • Michael F. Lovenheim
Abstract
This paper estimates the effect of the individual incentives teachers face in a teacher-based value-added merit pay tournament on student achievement. We first build an illustrative model in which teachers use proximity to an award threshold to update their information about their own ability, which informs their expected marginal return to effort. The model predicts that those who are closer to an award cutoff in a given year will increase effort and thus will have higher achievement gains in the subsequent year. However, if value-added scores are too noisy, teachers will not respond. Using administrative teacher-student linked data, we test this prediction employing a method akin to the bunching estimator of Saez (2010). Specifically, we examine whether teachers who are proximal to a cutoff in one year exhibit excess gains in test score growth in the next year. Our results show consistent evidence that teachers do not respond to the incentives they face under this program. In line with our model, we argue that a likely reason for the lack of responsiveness is that the value-added measures used to determine awards were too noisy to provide informative feedback about one's ability. This highlights the importance of value-added precision in the design of incentive pay systems.

Suggested Citation

  • Margaret Brehm & Scott A. Imberman & Michael F. Lovenheim, 2015. "Achievement Effects of Individual Performance Incentives in a Teacher Merit Pay Tournament," NBER Working Papers 21598, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:21598
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    Cited by:

    1. David J. Deming & David Figlio, 2016. "Accountability in US Education: Applying Lessons from K-12 Experience to Higher Education," Journal of Economic Perspectives, American Economic Association, vol. 30(3), pages 33-56, Summer.
    2. Julie Berry Cullen & Cory Koedel & Eric Parsons, 2021. "The Compositional Effect of Rigorous Teacher Evaluation on Workforce Quality," Education Finance and Policy, MIT Press, vol. 16(1), pages 7-41, Winter.
    3. Martins, Pedro S. & Ferreira, João R., 2024. "Effects of Individual Incentive Reforms in the Public Sector: The Case of Teachers," GLO Discussion Paper Series 1441, Global Labor Organization (GLO).
    4. Marx, Benjamin M., 2018. "Dynamic Bunching Estimation with Panel Data," MPRA Paper 88647, University Library of Munich, Germany.
    5. Gershenson, Seth, 2021. "Identifying and Producing Effective Teachers," IZA Discussion Papers 14096, Institute of Labor Economics (IZA).
    6. Fangzhou Hao & Jieran Ma & Linhuan Luo & Weijun Dang & Yiwei Xue, 2023. "Power distribution network inspection vision system based on bionic vision image processing," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 14(2), pages 568-577, April.
    7. Bjork, Christopher & Susanti, Dewi, 2023. "Can community participation leverage changes in teacher behavior? Evidence from remote areas of Indonesia," International Journal of Educational Development, Elsevier, vol. 102(C).

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    More about this item

    JEL classification:

    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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