How Can Principals Motivate Teachers? Understanding Subjective Performance Pay versus Monitoring

Christina Brown

Good teachers provide enormous short and long term benefits for their students. Attracting good teachers into the profession is a key area of policy interest for which there is relatively little evidence. This study uses teachers' contract choices and randomized controlled trial with 2500 teachers in 252 private schools in Pakistan to study whether performance pay can attracts and retains higher quality teachers. Consistent with models of adverse selection, we find that performance pay can induce positive selection into schools. High value-added teachers and teachers who respond more strongly to incentives significantly prefer performance pay and sort into these schools in response to these preferences. Using information treatments and additional contract treatment arms, we are able to isolate that high-quality teachers sort because they have accurate information about their quality, rather than due to differences in risk or competition preferences. Teachers also have significantly more information about their quality than their principal both at the time of hiring and throughout their tenure at the school. Taking into account the sorting effects from performance pay suggests that we have significantly underestimated the benefits of performance pay contracts on teaching quality.

About Christina Brown

Christina Brown is a doctoral student in Economics at UC Berkeley. She is interested in labor markets and human capital development in low resource settings. Her research focuses on the role of performance incentives and monitoring on employee motivation and screening in South Asia. In particular, she looks at the role of peer and manager knowledge to overcome moral hazard and adverse selection. She has worked on research projects throughout Africa and Asia and conducted fieldwork in Tanzania, Indonesia, Pakistan and India. Before graduate school, she worked as a research fellow at the Harvard Kennedy School and a consultant for the World Bank and Save the Children. She has a MALD from the Fletcher School at Tufts, concentrating in development economics, and a BA from UCLA in Physics & Political Science. Prior to working as a researcher, she taught AP Physics & Biology in a low-income school outside Boston.