Impact of Monetary Incentives on Teacher Decisions to Leave and Choose Schools: Evidence from a Policy Reform in Sao Paulo

Gregory Elacqua, Mateus Rodrigues and Leonardo Rosa

No 13950, IDB Publications (Working Papers) from Inter-American Development Bank

Abstract: Teacher turnover is a major challenge for human resource management in schools, adversely affecting student learning. We examine the impact of a monetary incentive program introduced in 2022 in the city of Sao Paulo, Brazil, which aims to reduce teacher turnover by allocating wage premiums ranging from 5% to 25% of base salary based on schools turnover levels. Our results show a significant reduction in turnover: an average decrease of 18% across all schools, with an even more pronounced 30% reduction in schools offering higher incentives. Notably, the program also attracted new teachers to these higher-incentive schools. An analysis of teacher preferences similarly reveals a shift towards schools offering greater wage premiums. Furthermore, we find that schools offering high incentives experienced significant improvements in student test scores, with gains of 0.3-0.6 standard deviations in standardized assessments. The findings demonstrate the effectiveness of monetary incentives in mitigating teacher turnover and improving educational outcomes, providing evidence-based guidance for policymakers developing teacher retention strategies.

Keywords: Teachers; financial incentives; teacher shortage; Teacher sorting; turnover rates; disadvantaged schools (search for similar items in EconPapers)
JEL-codes: I21 J45 J63 M52 (search for similar items in EconPapers)
Date: 2025-01
New Economics Papers: this item is included in nep-dev, nep-edu, nep-lam, nep-lma and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:idb:brikps:13950

DOI: 10.18235/0013366

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