Long Term Effects of Teacher Performance Pay: Experimental Evidence from India

Abstract: We present results from a five-year long randomized evaluation of group and individual teacher performance pay programs implemented across a large representative sample of government-run rural primary schools in the Indian state of Andhra Pradesh. We find consistently positive and significant impacts of the individual teacher incentive program on student learning outcomes across all durations of program exposure. Students who completed their full five years of primary school under the program performed significantly better than those in control schools by 0.54 and 0.35 standard deviations in math and language tests respectively. These students also scored 0.52 and 0.3 standard deviations higher in science and social studies tests even though there were no incentives on these subjects. The group teacher incentive program also had positive (and mostly significant) effects on student test scores, but the effect sizes were always smaller than that of the individual incentive program, and were not significant at the end of primary school for the cohort exposed to the program for five years. These results suggest that reforming the compensation structure of public sector employees could play an important role in enhancing the capacity of governments in developing countries to provide more effective services