Characteristics of Teacher Incentive Contracts and the Effects on Student Performance

Jane Arnold Lincove

In an era of high stakes accountability, many states and school districts are moving from traditional models of teacher pay to incentive-based models. In theory, incentive pay creates a financial reward to induce teachers to improve effort and quality of instruction. In practice, little is known about whether incentive models developed for the private sector can benefit public schools. While past empirical research suggests that incentives can improve teacher performance, there is little insight on the elements of an optimal incentive contract for teachers. A statewide program in Texas is currently funding over 200 school districts to implement unique, locally designed incentive contracts. This study will use the Texas data to examine how specific contract components – such size of bonuses, selection performance measures, level of risk sharing, and targeting high risk students – influence student performance and teacher sorting. This will be the first comprehensive large N study of incentive pay in a public school setting. The results will inform policy makers about how to design effective teacher incentives across diverse school contexts.

About Jane Arnold Lincove

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