Mexico's Carrera Magisterial (CM) is one of the pioneer teacher incentive programs in the world. It was instituted in 1992 and designed jointly by the federal education authorities, state authorities, and the teachers' union as a horizontal promotion system that rewards teachers with salary bonuses on the basis of their performance. Teacher performance is evaluated through a series of assessments, including teacher and student tests. The program has never been formally and independently evaluated even though it encompasses hundreds of thousands of teachers and is responsible for allocating millions of dollars in salary bonuses every year. The Mexican Ministry of Education (Secretaria de Educacion Public) posed the question: How can Carrera Magisterial be reformed to help it increase educational quality in Mexico? This monograph presents the results from the work addressing this question. While Breaking Ground (an English translation of "Haciendo Camino: Analisis del Sistema de Evaluacion y del Impacto del Programa de Estimulos Docentes Carrera Magisterial en Mexico, MG-471/1-EDU, 2006) is concerned specifically with evaluating Carrera Magisterial's system of teacher evaluation and is thus of particular interest to education policymakers at Mexico's Ministry of Education, it also offers general insights regarding teacher incentives and assessments that may serve to inform a broad audience of policymakers, educators, and the general public interested in the field of teacher reform. This study is is not a comprehensive evaluation of the program as public policy. Rather it is an evaluation of its internal functioning and its potential for affecting educational quality. It evaluates the adequacy of the instruments used by CM to measure teacher performance as well as to evaluate the the effects of the salary incentives offered by CM on some indicators of educational quality. This report is organized as follows. Chapter 1 presents the purpose of this study, the evaluationframework, and methodological approach. Chapter 2 presents a review on teacher incentive programs around the world. Chapter 3 provides a description of CM and teacher participation. Chapter 4 presents results from Rand's analysis of CM tests and testing procedures; Chapter 5 analyzes CM's peer review instrument. Chapter 6 presents results of the impact analysis of CM's salary incentives on student test scores as well as an analysis of the interrelationships among the program's factors. Chapter 7 describes Rand's policy recommendations, some final considerations, and directions for future research. (Contains 28 references and 2 figures.)