The Effects of a Teacher Performance-Pay Program on Student Achievement: A Regression Discontinuity Approach

This paper presents evidence from a regression-discontinuity analysis of a teacher performance-pay program, in which teachers are awarded an additional cash bonus for improving their students' achievement. Results show that teachers who failed to reach an expected benchmark for their students' achievement, resulting in no bonuses, performed significantly better in the subsequent year than those who reached this benchmark and thus received a bonus. This finding highlights that the presence of performance-pay incentives affects student achievement in future years by inducing more effort from teachers who failed in the present year. Moreover, the results demonstrate that such impact disappeared once the government repealed the pay scheme: another indication that teachers actively respond to monetary bonuses.