Research Associate

This paper derives a theoretical model for understanding the impact of providing teachers with bonuses for increasing student academic proficiency. Similar to previous labor economic research, we model a teacher’s choice of effort as a labor-leisure tradeoff. However, we recognize that teachers are different from other workers in that they could have some internal motivation to increase productivity and that this “caring ” for students could have implications for the impact of performance pay. We then test these predictions using data from a generous performance pay program in Little Rock, Arkansas. Using a differences-in-differences approach, we find that students whose teachers were eligible for performance pay made substantially larger test score gains in math, reading, and language than students taught by untreated teachers. Further, we find a negative relationship between the average performance of a teacher’s students the year before treatment began and the additional gains made after treatment