Teacher Performance Pay and Student Learning: Evidence from a Nationwide Program in Peru

We study a nationwide teacher pay-for-performance program implemented in public secondary schools in Peru in 2015, and examine its impact on student performance. The program takes the form of a tournament, awarding a bonus of... [ view full abstract ]

We study a nationwide teacher pay-for-performance program implemented in public secondary schools in Peru in 2015, and examine its impact on student performance. The program takes the form of a tournament, awarding a bonus of over a month's salary to the principal and every teacher from schools in the top 20 percent within a group of comparable schools. Exploiting the fact that the main performance measure used to rank schools in this tournament is the average score of 8th graders in a 2015 standardized test, we perform a difference-in-differences estimation comparing changes in the internal grades of 8th graders before and after the incentive was introduced to those of 9th graders from the same school. We find that the teacher pay-for-performance program had a precisely estimated zero effect on student achievement, allowing us to reject impacts greater than 0.017 standard deviations, well below those previously found in the literature. We provide evidence against a series of potential explanations, and argue that this zero effect can be explained by some of the program's characteristics, which may have hindered teachers' ability to improve the incentivized outcome or infer their probability of winning.