Teacher Incentives and Student Achievement: Evidence from New York City Public Schools

Merit pay for teachers remains a volatile issue,
and this NBER working paper does little to quench that fire. It evaluates the
efficacy of New York City’s high-profile performance-pay program, conducted in
200 high-needs schools over three years. Overall, it finds no effect of teacher
performance pay on student achievement. Yet these results are misleading. Unpack
them and find some eyebrow raising concerns: First, performance bonuses were
awarded to schools to divvy up amongst their staff, not to specific teachers.
Over 80 percent of the schools distributed the bonuses equally, muting the
ability of such rewards to incentivize quality instruction or distinguish good
from mediocre (or worse). Second, the vast majority of schools in the study
were awarded bonuses: More than three-quarters qualified for the maximum
payment in the second year. Third, the performance measure used was
enormously—and unnecessarily—complex, providing teachers with minimal agency
over their final scores. Far from representing a bold experiment with pay for
performance, this scheme closely resembles the status quo: The majority of
teachers are considered highly effective by the system no matter how their
students perform. Mayor Michael Bloomberg traded
major concessions on early retirement
to convince the UFT to try pay for
performance. Unfortunately, and despite the publicity
afforded Fryer’s paper
, this expensive effort has little to say about how a
well-designed compensation system might incentivize teachers to be more
effective—or how it might attract stronger teachers to the profession.

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Roland G. Fryer, “Teacher
Incentives and Student Achievement: Evidence from New York City Public Schools

(Washington, D.C.: National Bureau of Economic Research, March 2011).