Incentives to Improve Education

Incentives to Improve Education

A New Perspective

Robert McMeekin

Incentives to Improve Education identifies three categories of incentives: rewards, (financial rewards for teachers), competition (educational choice, often in the form of payment for education by voucher) and threats (introduction of external standards and accountability for performance).

Chapter 3: Rewards for Good Performance

Robert McMeekin

Subjects: economics and finance, economics of education, institutional economics, labour economics, post-keynesian economics, education, economics of education, politics and public policy, public policy, social policy and sociology, labour policy


INTRODUCTION There are three broad approaches to providing monetary incentives to teachers for good performance: (1) merit pay (usually a one-time bonus) to individual teachers for their unique contribution to school performance in a given year, whether based on the school director’s evaluation of that contribution or some more objective measure of performance such as test results; (2) awards to whole school establishments in the form of a bonus divided between all members of the team of people involved in producing the academic performance; and (3) development of a compensation system based on a multi-dimensional evaluation of teacher performance and a scale of compensation that rewards knowledge, skills and actions directly associated with professional performance rather than purely on seniority and academic degrees. Research on merit pay to individuals as a way to provide market-like incentives concludes that there are many reasons why this intervention has rarely been successful. This includes both the work of Murnane and Cohen (1986) and Malen, Murphy and Hart (1987) as well as more recent studies such as Odden and Kelley (1997). Malen, Murphy and Hart (1987, pp. 96– 108) provide an extensive critique of individual merit pay. They conclude: In sum, the merit pay strategy operates as a relatively weak vehicle for reallocating salary and a potentially counterproductive means for conferring status. The current experience echoes previous experiments. Although merit pay policies have been enacted, removed, revived and retried for decades, few endure … The strategy does not appear to be a viable approach to...

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