From the latest issue of the Journal of Public Economics.Â
Individual teacher incentives and student performance
David N. Figlio and Lawrence W. Kenny
This paper is the first to systematically document the relationship between individual teacher performance incentives and student achievement using the United States data. We combine data from the National Education Longitudinal Survey on schools, students, and their families with our own survey conducted in 2000 regarding the use of teacher incentives. This survey on teacher incentives has unique data on frequency and magnitude of merit raises and bonuses, teacher evaluation, and teacher termination. We find that test scores are higher in schools that offer individual financial incentives for good performance. Moreover, the estimated relationship between the presence of merit pay in teacher compensation and student test scores is strongest in schools that may have the least parental oversight. The association between teacher incentives and student performance could be due to better schools adopting teacher incentives or to teacher incentives eliciting more effort from teachers; it is impossible to rule out the former explanation with our cross sectional data.
OK, I admit that we don’t know how ‘fair’ these schemes were. But as the authors point out, we don’t have a whole lot of evidence on the effect of merit pay on student performance, and this is plausibly the best study thus far on the US. The effects are statistically significant, but notÂ huge (1-3 NAEP points on a test where the standard deviation is 33 points). As the authors point out, having merit pay at your schoolÂ isÂ comparable in magnitude to increasing maternal education by approximately 3 years.