How Do Principals Reward Teachers? Understanding Subjective Performance Pay

This project measures the direct incentive effect and sorting effect of incentivizing teachers based a subjective measure, their principal’s evaluation of them, compared to incentives based on percentile value added or no incentive pay. Existing work has shown the effect of the latter incentive, but the former is very common in other sectors and easier to implement, so it could be a cost-effective way to incentivize teachers in low-income settings where standardized tests cannot be administered. Because principals may be biased against certain employees we will measure the trade-off between the favoritism this introduces and the incentive effects. We will also trace teachers to measure sorting based on each type of incentive.