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Research Paper: Incentives Work: Getting Teachers to Come to School

Performance Pay, Teacher performance

Esther Duflo, Rema Hanna, and Stephen P. Ryan

Abstract

We use a randomized experiment and a structural model to test whether monitoring and financial incentives can reduce teacher absence and increase learning in rural India. In treatment schools, teachers’ attendance was monitored daily using cameras, and their salaries were made a nonlinear function of attendance. Absenteeism by teachers fell by 21 percentage points relative to the control group, and children’s test scores increased by 0.17 standard deviations. We estimate a structural dynamic labor supply model and find that teachers responded strongly to the financial incentives, and that this alone can explain the difference between the two groups. Our model is used to compute cost-minimizing compensation policies.

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