Monetary Incentives for Students and Teachers in Schools: Experimental Evidence and Policy Implications

This lecture will discuss the effect of teachers' monetary incentives in an experiment among English and mathematics teachers in high schools in Israel.

The program has much in common with performance-pay initiatives being tested in the U.S and elsewhere. Teachers were rewarded with cash bonuses for improving their students' performance in high-school matriculation exams. The teachers' incentives led to significant improvements in students' performance, increasing both test taking rates and conditional pass rates and mean test scores.

The second part of the talk will discuss an attempt to increase matriculation among low-achieving students by offering substantial cash incentives to high school seniors. As a theoretical matter, such incentives may be helpful if low-achieving students reduce investment in schooling because of high discount rates, part-time work or face peer pressure not to study. The experiment used a school-based randomisation design offering awards to all students in treated schools who passed their exams. This intervention led to a substantial increase in certification rates for girls, though not for boys.