New Report: Performance-related-pay for teachers could improve education system

Teachers should be paid more when their students get good grades, but should not be forced to compete with one another

A new report by economist Scott Imberman published today on IZA World of Labor shows that well-designed performance-related-pay (PRP) schemes for teachers can effectively improve student performance. The report states that teacher credentials and experience have little impact on student performance, so pay should no longer be determined by these factors.

Report URL: http://wol.iza.org/articles/how-effective-are-financial-incentives-for-teachers

Research shows that:

• Financial incentives can be highly effective and relatively cheap to implement
• PRP schemes can effectively improve student performance
• Schemes based on group performance or require competition with other teachers do not work

PRP schemes for teachers are most effective when based purely on individual teachers and the success of their students. Bonus/financial incentives do not work well when they are determined by the collective performance of large groups of teachers. Schemes also do not work, and could be harmful, when the incentives are based on meeting a target or doing better than other teachers.

Financial incentives are designed to encourage teachers to exert more effort and deliver a higher quality and quantity of teaching. Examples of this are:  spending more time on classroom instruction or after-school tutoring, adopting innovative teaching techniques, analyzing data to improve student performance, and experimenting with different teaching methods.

Another crucial reason for implementing PRP is to recruit high-quality teachers. Economists have theorized that incentives will attract people to the teaching profession, who may not have considered a teaching career previously, and who are better at improving student performance.

Financial incentives for teaching excellence increased more than 40% between 2004 and 2012 in the USA, and they have also been implemented in many other countries, including Denmark, India, Israel, Kenya, Hungary, and Norway.

Paying teachers more when their students do well is a controversial topic. The National Union of Teachers (NUT) and the Association of Teachers and Lecturers (ATL) are not in favor of the concept. The NUT have issued the following statement: “The Government tries to argue that Performance Related Pay is all about paying good teachers more.  That’s just not true.  Pressures on school funding mean that for every teacher who is paid more, several will be paid less.  This will lead to lower pay and worse pay prospects, hitting teacher recruitment, retention and motivation.”

The ATL say: “The complexity and range of factors which influence how well children do at school make it far too difficult to devise a fair system of performance related pay.”

Scott Imberman, author of the report, says: “Providing teachers with financial incentives to improve student performance has been an increasingly popular education reform worldwide. This study shows that the research we have on this topic finds that incentives can be effective but must be designed appropriately and ought to avoid focusing on a single metric such as test scores.”

Media contact:

Please contact Sarah Williams at Bloomsbury for more information, for author comments and interviews, or if you are interested in an exclusive look at the article before publication - Sarah.Williams@Bloomsbury.com

Notes for editors:

• IZA World of Labor (http://wol.iza.org) is a global, freely available online resource that provides policy makers, academics, journalists, and researchers, with clear, concise and evidence-based knowledge on labor economics issues worldwide.
• The site offers relevant and succinct information on topics including diversity, migration, minimum wage, youth unemployment, employment protection, development, education, gender balance, labor mobility and flexibility among others.
• Established in 1998, the Institute for the Study of Labor (www.iza.org) is an independent economic research institute focused on the analysis of global labour markets. Based in Bonn, it operates an international network of about 1,300 economists and researchers spanning more than 45 countries.