As the U.S. Department of Education moves ahead with efforts to bride states (“Race to the Top”) into its “model” of school reform, which includes some version of merit or performance pay for teachers, this recent study of the effect of performance pay for teachers on students’ test scores in Portugal is worthy of study. While there are some methodological limitations to this “natural experiment” (one’s that I hope to discuss in an article on recent research on charter schools) the paper is notable.
Individual Teacher Incentives, Student Achievement and Grade Inflation, Pedro S. Martins, Queen Mary, University of London
Abstract: How do teacher incentives affect student achievement? We contribute to this question by examining the effects of the recent introduction of teacher performance-related pay and tournaments in Portugal’s public schools. Specifically, we draw on matched student-school panel data covering the population of secondary school national exams over seven years. We then conduct a difference-in-differences analysis based on two complementary control groups: public schools in two autonomous regions that were exposed to lighter versions of the reform than in the rest of the country; and private schools, which are also subject to the same national exams but whose teachers were not affected by the reform. Our results consistently indicate that the increased focus on individual teacher performance caused a significant decline in student achievement, particularly in terms of national exams. The triple- difference results also document a significant increase in grade inflation.
The paper can be downloaded here.