Pay for Percentile

Gadi Barlevy and Derek Neal ()
Additional contact information
Derek Neal: University of Chicago

No 4383, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We propose an incentive pay scheme for educators that links educator compensation to the ranks of their students within appropriately defined comparison sets, and we show that under certain conditions our scheme induces teachers to allocate socially optimal levels of effort to all students. Because this scheme employs only ordinal information, our scheme allows education authorities to employ completely new assessments at each testing date without ever having to equate various assessment forms. Thus, our scheme removes incentives for teachers to teach to a particular assessment form and eliminates any opportunities to influence reward pay by corrupting the equating process or the scales used to report assessment results. Having shown that cardinal measures of achievement growth over time are not a necessary ingredient of incentive systems for educators, we note that education authorities can employ our scheme as a means of providing incentives for educators while employing a separate system for measuring growth in student achievement that involves no stakes for educators. This approach creates no incentives for educators to take actions that contaminate the measurement of student progress.

Keywords: compensation; education; tournaments (search for similar items in EconPapers)
JEL-codes: I20 J33 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2009-08
New Economics Papers: this item is included in nep-cta, nep-edu, nep-lab and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Published - published in: American Economic Review, 2012, 102 (5), 1805-31

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https://docs.iza.org/dp4383.pdf (application/pdf)

Related works:
Journal Article: Pay for Percentile (2012)
Working Paper: Pay for Percentile (2011)
Working Paper: Pay for percentile (2009)
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