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ERIC Number: ED513537
Record Type: Non-Journal
Publication Date: 2010
Pages: 23
Abstractor: As Provided
The Impact of Incentives on Effort: Teacher Bonuses in North Carolina. Program on Education Policy and Governance Working Papers Series. PEPG 10-06
Ahn, Tom; Vigdor, Jake
Program on Education Policy and Governance, Harvard University, Paper prepared for the PEPG Conference "Merit Pay: Will It Work? Is It Politically Viable?" (Harvard Kennedy School, Cambridge, MA, Jun 3-4, 2010)
Teacher effort, a critical component of education production, has been largely ignored in the literature due to measurement difficulties. Using a principal-agent model, North Carolina public school data, and the state's unique accountability system that rewards teachers for school-level academic growth, we show that we can distill effort from teacher absence data and capture its effect on student achievement in a structural framework. We find that: (1) Incentives lead teachers to try harder. The bonus program reduced the number of sick days taken by about 0.6 days for an average teacher; (2) When teachers try harder, students do better. Increased effort of teachers translates into improved student performance. Estimates show that standardized reading scores increased by about 1.3% of a standard deviation and standardized math scores by about 0.9% of a standard deviation; and (3) Group-level incentives can actually be more powerful than individual-level incentives. Policy simulations from the model estimates show that an individual bonus program would actually produce weaker incentive effects. While free-rider effects are eliminated, individual incentives push a majority of teachers into one of two categories: those who would qualify for the bonus even without trying and others would not qualify no matter how hard they worked. A bibliography is included. (Contains 3 figures and 10 footnotes.)
Program on Education Policy and Governance. Harvard University, Kennedy School of Government, 79 John F. Kennedy Street, Taubman 304, Cambridge, MA 02138. Tel: 617-495-7976; Fax: 617-496-4428; e-mail:; Web site:
Publication Type: Reports - Research; Speeches/Meeting Papers
Education Level: Elementary Secondary Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: Harvard University, Program on Education Policy and Governance
Identifiers - Location: North Carolina
Grant or Contract Numbers: N/A