A Quantitative Framework for Analyzing the Distributional Effects of Incentive Schemes

Hugh Macartney, Robert McMillan and Uros Petronijevic

No 28816, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper develops the first quantitative framework for analyzing distributional effects of incentive schemes in public education. The analysis is built around a hump-shaped effort function, estimated semi-parametrically using exogenous incentive variation and rich administrative data. We identify key primitives that rationalize this effort function by estimating a flexible teacher effort-choice model. Both the model and parameter estimates are necessary components in our counterfactual framework for tracing the effects of alternative accountability systems on the entire test score distribution, with effort adjusting endogenously. We find widespread schemes that set a fixed target for all students give rise to a steep performance-inequality tradeoff. Further, counterfactual incentive policies can outperform existing schemes for the same cost — reducing the black-white test score gap by 7% (via student-specific bonuses), and lowering test-score inequality across students by 90% (via student-specific targets). Our quantitative approach opens up new possibilities for incentive design in practice.

JEL-codes: D82 I21 J33 M52 (search for similar items in EconPapers)
Date: 2021-05
Note: CH ED LS PE
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.nber.org/papers/w28816.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:28816

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w28816

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().