Teacher Pay and Educational Outcomes: Evidence from the Rural Hardship Allowance in Zambia (S-41407-ZMB-1)

This paper studies the effect of unconditional teacher salary increases on teacher and student outcomes. To study the issue, we evaluate the rural hardship for teachers in Zambia, which corresponds to a salary increase of 20%. This allowance is allocated to schools beyond a given distance from their district center, and this allows us to use a regression discontinuity design to identify its effects at the school level. We use administrative data from 2004 to 2015 on school and teacher characteristics and on Grade 7 student test scores. In addition, we perform a small telephone survey of schools close to the eligibility threshold for the allowance. We find that crossing the eligibility threshold increases the share of teachers obtaining the allowance by around 40pp. Because of the fairly high degree of non-compliance with the rule, our estimates are fairly imprecise. Focusing on the provinces where compliance is stronger we find some (albeit weak) evidence that the allowance increases the amount of teachers, their tenure, and reduces transfers away from schools. However, we find no effects on teacher characteristics or on student grades. All in all, it appears that the allowance succeeds in keeping teachers in rural areas, but with no implication for student performance