Dynamic Effects of Teacher Incentive Pay: Evidence from a Rank-Order Tournament in the Houston Public Schools
Michael F. Lovenheim

About the research

Award

NAEd/Spencer Postdoctoral Fellowship

Award Year

2011

Institution

Cornell University

Primary Discipline

Economics
Teacher incentive pay is growing in popularity in the United States, yet currently little is known about how teachers respond to individual incentives and how these responses translate into achievement in the classroom. This paper identifies how teachers respond to the specific award incentives of a rank-order merit pay tournament enacted by the Houston Independent School District (HISD) called ASPIRE. The ASPIRE program pays teachers based on the quartile of their subject-specific value-added test scores, such that the top quartile teachers receive the largest amount, the second quartile teachers receive less and below-median teachers receive no award. Using teacher-level performance data obtained by special permission from HISD, we will study two distinct questions about how teachers respond to the incentives of the ASPIRE program. Because the tournament uses award cutoffs based on value-added quartiles, teachers closer to cutoffs have higher expected returns from increasing effort than teachers farther away from those cutoffs. Thus, we will examine how subsequent teacher performance reacts to how far teachers are from an award increase. In addition, we will use a regression discontinuity approach around each award cutoff to examine whether there are behavioral effects from winning an award. If it is the case that winning an award impacts subsequent performance, it is suggestive that giving awards throughout the value-added distribution may lead to larger student test score gains. Overall, this will be the first paper in the literature to examine how teachers respond to the specific award incentives of a merit pay system and will advance our understanding of how to structure teacher incentive pay to best promote student academic achievement.
About Michael F. Lovenheim
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