Performance pay schemes create a direct link between a teacher’s wages or bonus, and the performance of their class. A distinction can be drawn between awards, where improved performance leads to a higher permanent salary, and payment by results, where teachers get a bonus for higher test scores. These bonuses can be retrospective (payment after satisfactory pupil performance) or prospective (such as ‘loss aversion’ approaches where the bonus is given upfront, but then paid back if the results are not satisfactory). A key issue is how performance is measured and how closely this is linked to outcomes for learners.

Search terms: performance/incentive pay; teacher incentives; performance-related pay; merit pay, bonus pay, loss aversion

Puntuació de l'evidència

There is one meta-analysis which was conducted in the last ten years on performance pay. Most of the research tends to be correlational or from matched groups, although some studies with stronger causal warrant have emerged from the USA over the last few years. In general, it is hard to make causal claims about the benefits of performance pay on the basis of existing evidence. Overall the evidence is rated as limited.

Informació cost addicional

Sums of between $15,000 and $5,000 have been awarded in merit pay schemes in the US. In England, performance pay generally means schools using staff performance to allocate teacher progression within existing pay ranges. Some academies have paid one off performance bonuses of between £100 and £2000 per teacher (or between £4 and £80 per pupil across a class of 25). Overall, costs are low estimated as low.


1 - Atkinson, A., Burgess, S., Croxson, B., Gregg, P., Propper, C., Slater, H. & Wilson, D.

Evaluating the Impact of Performance-related Pay for Teachers in England

Labour Economics 16:3, pp 251-261



2 - Balch, R., & Springer, M. G.

Performance pay, test scores, and student learning objectives

Economics of Education Review, 44, 114-125



3 - Burgess, S., Croxson, B., Gregg, P. & Propper, C.

The Intricacies of the Relationship Between Pay and Performance for Teachers: Do teachers respond to Performance Related Pay schemes? 

CMPO Working Paper Series No. 01/35



4 - Dolton, P. & Marcenaro-Gutierrez, O.

If You Pay Peanuts, Do You Get Monkeys? A Crosscountry Analysis of Teacher Pay and Pupil Performance

Economic Policy 26(65): 5-55



5 - Education Commission of the States

Teacher Merit Pay: What do we Know?

The Progress of Education Reform, 11(3)



6 - Fryer Jr, R. G., Levitt, S. D., List, J., and Sadoff, S.

Enhancing the efficacy of teacher incentives through loss aversion: A field experiment

NBER Working Paper. Cambridge, MA: NBER



7 - Fryer, R.G.

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

National Bureau of Economic Research, Working Paper 16850



8 - Glazerman, S. & Seifullah, A.

An Evaluation of the Teacher Advancement Program (TAP) in Chicago: Year Two Impact Report

Mathematica Policy Research, Inc./ IES



9 - Glazerman, S., Protik, A., Teh, B. R., Bruch, J., & Max, J.

Transfer incentives for high-performing teachers: Final results from a multisite randomized experiment

Mathematica Policy Research, Inc./ IES



10 - Goldhaber, D., & Walch, J.

Strategic pay reform: A student outcomes-based evaluation of Denver's ProComp teacher pay initiative

Economics of Education Review, 31(6), 1067-1083



11 - Lavy, V.

Evaluating the Effects of Teachers’ Group Performance Incentives on Pupil Achievement

Journal of Political Economy, 110(6), 1286-1317



12 - Martins, P.S.

Individual Teacher Incentives, Student Achievement and Grade Inflation 

Centre for Globalization Research: Working Paper 29. Queen Mary, University of London



13 - Muralidharan, K. & Sundararaman, V.

Teacher Performance Pay: Experimental Evidence from India 

Journal of Political Economy, 119(1), 39 - 77



14 - Podgursky, M. J., & Springer, M. G.

Teacher performance pay: A review 

Journal of Policy Analysis and Management, 26(4), 909



15 - Shifrer, D., Turley, R. L., & Heard, H.

Do Teacher Financial Awards Improve Teacher Retention and Student Achievement in an Urban Disadvantaged School District?

American Educational Research Journal, 54(6), 1117-1153



16 - Springer, M. G., & Winters, M. A.

The NYC Teacher Pay-for-Performance Program: Early Evidence from a Randomized Trial

Civic Report No. 56. Manhattan Institute for Policy Research



17 - Springer, M. G., Pane, J. F., Le, V. N., McCaffrey, D. F., Burns, S. F., Hamilton, L. S., & Stecher, B.

Team pay for performance: Experimental evidence from the round rock pilot project on team incentives

Educational Evaluation and Policy Analysis, 34(4), 367-390



18 - Washington State Institute for Public Policy (Abstract)

Teacher Performance Pay Programs

Seattle: WISPP



19 - Wellington, A., Chiang, H., Hallgren, K., Speroni, C., Herrmann, M., Burkander, P & Warner, E.

Evaluation of the Teacher Incentive Fund: Implementation and Impacts of Pay-for-Performance after Three Years

NCEE 2016-4004. National Center for Education Evaluation and Regional Assistance. Washington: IES/US Department of Education



20 - Woessmann, L.

Cross-Country Evidence on Teacher Performance Pay

CESifo Working Paper No. 3151 Category 5: Economics Of Education Munich: CESifo



21 - Yuan, K., Le, V. N., McCaffrey, D. F., Marsh, J. A., Hamilton, L. S., Stecher, B. M., & Springer, M. G.

Incentive pay programs do not affect teacher motivation or reported practices results from three randomized studies

Educational Evaluation and Policy Analysis, 35(1), 3-22


Resum d'efectivitat




Resum metanàlisi

18 - Washington State Institute for Public Policy (2015)

Teacher performance pay programs distribute bonuses to individual teachers and sometimes to school wide staff. Performance is usually measured as value-added student test scores alone or in combination with some other assessment (such as principal evaluations). These evaluations examine the impact on student test scores from short-term, pilot performance pay programs. 28 studies, impact on test scores 0.019.

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