Technical Appendix

Definition

Performance pay schemes create a direct link between a teacher’s wages or bonus, and the performance of their class. A distinction can be drawn between awards, where improved performance leads to a higher permanent salary, and payment by results, where teachers get a bonus for higher test scores. These bonuses can be retrospective (payment after satisfactory pupil performance) or prospective (such as ‘loss aversion’ approaches where the bonus is given upfront, but then paid back if the results are not satisfactory). A key issue is how performance is measured and how closely this is linked to outcomes for learners.

Search terms: performance/incentive pay; teacher incentives; performance-related pay; merit pay, bonus pay, loss aversion

Evidence Rating

There is one meta-analysis which was conducted in the last ten years on performance pay. Most of the research tends to be correlational or from matched groups, although some studies with stronger causal warrant have emerged from the USA over the last few years. In general, it is hard to make causal claims about the benefits of performance pay on the basis of existing evidence. Overall the evidence is rated as limited.

Additional Cost Information

Sums of between $15,000 and $5,000 have been awarded in merit pay schemes in the US. In England, performance pay generally means schools using staff performance to allocate teacher progression within existing pay ranges. Some academies have paid one off performance bonuses of between £100 and £2000 per teacher (or between £4 and £80 per pupil across a class of 25). Overall, costs are low estimated as low.

References

1
Atkinson, A., Burgess, S., Croxson, B., Gregg, P., Propper, C., Slater, H. & Wilson, D.
Evaluating the Impact of Performance-related Pay for Teachers in England open_in_new
Labour Economics 16:3, pp 251-261
(2009)
2
Balch, R., & Springer, M. G.
Performance pay, test scores, and student learning objectives open_in_new
Economics of Education Review, 44, 114-125
(2015)
3
Burgess, S., Croxson, B., Gregg, P. & Propper, C.
The Intricacies of the Relationship Between Pay and Performance for Teachers: Do teachers respond to Performance Related Pay schemes? open_in_new
CMPO Working Paper Series No. 01/35
(2001)
4
Dolton, P. & Marcenaro-Gutierrez, O.
If You Pay Peanuts, Do You Get Monkeys? A Crosscountry Analysis of Teacher Pay and Pupil Performance open_in_new
Economic Policy 26(65): 5-55
(2011)
5
Education Commission of the States
Teacher Merit Pay: What do we Know? open_in_new
The Progress of Education Reform, 11(3)
(2010)
6
Fryer Jr, R. G., Levitt, S. D., List, J., and Sadoff, S.
Enhancing the efficacy of teacher incentives through loss aversion: A field experiment open_in_new
NBER Working Paper. Cambridge, MA: NBER
(2012)
7
Fryer, R.G.
Teacher Incentives and Student Achievement: Evidence from New York City Public Schools open_in_new
National Bureau of Economic Research, Working Paper 16850
(2011)
8
Glazerman, S. & Seifullah, A.
An Evaluation of the Teacher Advancement Program (TAP) in Chicago: Year Two Impact Report open_in_new
Mathematica Policy Research, Inc./ IES
(2010)
9
Glazerman, S., Protik, A., Teh, B. R., Bruch, J., & Max, J.
Transfer incentives for high-performing teachers: Final results from a multisite randomized experiment open_in_new
Mathematica Policy Research, Inc./ IES
(2013)
10
Goldhaber, D., & Walch, J.
Strategic pay reform: A student outcomes-based evaluation of Denver's ProComp teacher pay initiative open_in_new
Economics of Education Review, 31(6), 1067-1083
(2012)
11
Lavy, V.
Evaluating the Effects of Teachers’ Group Performance Incentives on Pupil Achievement open_in_new
Journal of Political Economy, 110(6), 1286-1317
(2002)
12
Martins, P.S.
Individual Teacher Incentives, Student Achievement and Grade Inflation open_in_new
Centre for Globalization Research: Working Paper 29. Queen Mary, University of London
(2009)
13
Muralidharan, K. & Sundararaman, V.
Teacher Performance Pay: Experimental Evidence from India open_in_new
Journal of Political Economy, 119(1), 39 - 77
(2011)
14
Podgursky, M. J., & Springer, M. G.
Teacher performance pay: A review open_in_new
Journal of Policy Analysis and Management, 26(4), 909
(2007)
15
Shifrer, D., Turley, R. L., & Heard, H.
Do Teacher Financial Awards Improve Teacher Retention and Student Achievement in an Urban Disadvantaged School District? open_in_new
American Educational Research Journal, 54(6), 1117-1153
(2017)
16
Springer, M. G., & Winters, M. A.
The NYC Teacher Pay-for-Performance Program: Early Evidence from a Randomized Trial open_in_new
Civic Report No. 56. Manhattan Institute for Policy Research
(2009)
17
Springer, M. G., Pane, J. F., Le, V. N., McCaffrey, D. F., Burns, S. F., Hamilton, L. S., & Stecher, B.
Team pay for performance: Experimental evidence from the round rock pilot project on team incentives open_in_new
Educational Evaluation and Policy Analysis, 34(4), 367-390
(2012)
18
Washington State Institute for Public Policy (Abstract arrow_downward)
Teacher Performance Pay Programs open_in_new
Seattle: WISPP
(2015)
19
Wellington, A., Chiang, H., Hallgren, K., Speroni, C., Herrmann, M., Burkander, P & Warner, E.
Evaluation of the Teacher Incentive Fund: Implementation and Impacts of Pay-for-Performance after Three Years open_in_new
NCEE 2016-4004. National Center for Education Evaluation and Regional Assistance. Washington: IES/US Department of Education
(2014)
20
Woessmann, L.
Cross-Country Evidence on Teacher Performance Pay open_in_new
CESifo Working Paper No. 3151 Category 5: Economics Of Education Munich: CESifo
(2010)
21
Yuan, K., Le, V. N., McCaffrey, D. F., Marsh, J. A., Hamilton, L. S., Stecher, B. M., & Springer, M. G.
Incentive pay programs do not affect teacher motivation or reported practices results from three randomized studies open_in_new
Educational Evaluation and Policy Analysis, 35(1), 3-22
(2013)

Summary of effects

Meta-analyses Effect size FSM effect size
Washington State Institute for Public Policy, (2015)
0.02 -
Single Studies Effect size FSM effect size
Atkinson, A., Burgess, S., Croxson, B., Gregg, P., Propper, C., Slater, H. & Wilson, D. (2009)
0.02 -
Balch, R., & Springer, M. G. (2015)
0.03 -
Fryer Jr, R. G., Levitt, S. D., List, J., and Sadoff, S. (2012)
0.06 -
Goldhaber, D., & Walch, J. (2012)
0.04 -
Martins, P.S. (2009)
-0.09 -
Muralidharan, K. & Sundararaman, V. (2011)
0.15 -
Shifrer, D., Turley, R. L., & Heard, H. (2017)
-0.11 -
Springer, M. G., & Winters, M. A. (2009)
-0.02 -
Springer, M. G., Pane, J. F., Le, V. N., McCaffrey, D. F., Burns, S. F., Hamilton, L. S., & Stecher, B. (2012)
0.01 -
Wellington, A., Chiang, H., Hallgren, K., Speroni, C., Herrmann, M., Burkander, P & Warner, E. (2014)
0.05 -
Effect size (weighted mean) 0.04  

The right hand column provides detail on the specific outcome measures or, if in brackets, details of the intervention or control group.

Meta-analyses abstracts

18
Washington State Institute for Public Policy (2015)

Teacher performance pay programs distribute bonuses to individual teachers and sometimes to school wide staff. Performance is usually measured as value-added student test scores alone or in combination with some other assessment (such as principal evaluations). These evaluations examine the impact on student test scores from short-term, pilot performance pay programs. 28 studies, impact on test scores 0.019.