1. Evaluating the Impact of Performance-related Pay for teachers in England
Adele Atkinson, Simon Burgess, Bronwyn Croxson, Paul Gregg, Carol Propper, Helen Slater, Deborah Wilson

2. Background
Improving education outcomes key priority for governments, but evidence suggests poor returns from simply raising school resources.
One alternative mechanism: incentives for teachers, but rel. little evidence on impact.
1999: UK government introduced performance related pay scheme for teachers (the “Performance Threshold”).
Performance assessed across five criteria, inc. pupil progress (value-added).
Boo!
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3. What we do in this paper
Quantitative evaluation of the impact of this PRP scheme for teachers on pupil test score gains.
Design
Longitudinal teacher-level data and a difference-in-difference research design.
Link pupils to their teachers for each subject; collect prior attainment data for each pupil.
So control for teacher and pupil fixed effects.
Also control for differences in teacher experience.
Incentive scheme had significant effects on pupil progress.
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4. Outline of the talk Current evidence (in paper, not here)
The National Curriculum
The PRP scheme
Data
Evaluation methodology
Results
Conclusion
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5. The National Curriculum
Centralised system of control over national exams and teacher pay scales.
All pupils tested at the end of each Key Stage of the National Curriculum.
KS1 and KS2 tests taken at ages 7 and 11; KS3 and KS4 (GCSE) taken at ages 14 and 16.
KS1, 2, 3 tests taken in English, maths, science.
These subjects compulsory also at KS4.
We focus on KS4 and value added between KS3 and KS4.
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6. The PRP scheme
Labour administration 1998 Green Paper: range of reforms to education, inc. performance-related element to teacher pay.
The ‘Performance Threshold’ introduced in 1999/2000; first applications in July 2000.
The Performance Threshold itself was one element of larger pay reform, designed to affect teacher effort, as well as recruitment and retention.
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7. The PRP scheme II
Prior to the PRP scheme, all teachers paid on unified basic salary scale which had 9 full points.
Position on scale depended on qualifications and/or experience; progress through annual increments. Plus additional management points available.
1999/2000: approx. 75% of teachers at top of scale, at spine point 9.
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8. The PRP scheme III
After the reforms, teachers on spine point 9 could apply to pass the Performance Threshold. 2 effects:
Annual bonus of £2,000.
Move onto the Upper Pay Scale (UPS): additional spine points, each of which related to performance.
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9. The PRP scheme IV
To pass the Threshold, teachers had to demonstrate effectiveness in five areas, including pupil progress (value added).
Forms submitted by July Assessed by headteacher and external assessor.
Initial Threshold payments funded out of a separate, central budget; no quota or limit.
The vast majority of eligible teachers both applied and were awarded the bonus.
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10. Was it incentive pay? Wragg et al (2001) survey of 1000 schools But
In these schools, 88% of the eligible teachers applied, and of these 97% were awarded the bonus
Unconditional pay increase - little effect on teacher effort.
But
Ex ante (Marsden) survey suggests teachers believed it to be ‘real’
UPS element clearly performance related
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11. Teacher survey before implementation
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12. Data requirements
Control for pupil prior attainment to measure progress or value added:
KS3-GCSE; English, maths, science.
Longitudinal element:
Follow same teachers through two complete KS3-GCSE teaching cycles (before and after scheme introduced).
Link pupils to teachers:
Obtain class lists direct from schools.
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13. Sample First approached schools in 2000.
Onerous data requirements; problems with school information systems; teacher and headteacher turnover.
Final sample:
18 schools.
181 teachers (145 eligible; 36 not eligible).
Approx. 23,000 pupils.
No presumption that sample is representative.
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14. Evaluation Methodology
Pupil i; teacher j; teaching cycle t.
Teacher effectiveness, X; test score, g; value-added v.
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15. Difference between two tranches:
Teacher mean scores:
Difference between two tranches:
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16. This is the difference-in-difference. If
Differencing between eligible and ineligible teachers. D(x) operator means:
D(x)  E(x|DI=1) – E(x|DI=0)
This is the difference-in-difference. If
This yields:
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17. And same steps as before yield the following as the diff-in-diff:
For value-added:
And same steps as before yield the following as the diff-in-diff:
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18. Key issues Parameters of interest are: Role of experience profile:
g3b for gross test score
m2b for value added
Role of experience profile:
If f(W) is linear, no problem, as DDf(W) = 0
If concave, diff-in-diff underestimates parameters of interest, as DDf(W) < 0.
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19. Experience Profile
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20. Key issues (cont.) Experimental design and pupil assignment:
No grouping on effort.
Timing of class assignment.
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21. Results Difference-in-difference results Regressions Robustness checks
Interpretation and evaluation
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22. Table 2: D-inD analysis: GCSEs
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23. Table 3: D-in-D VA Means
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24. Experience Difference
Potentially need to control for systematic differences in experience: ideal: non-parametrically defined experience-effectiveness profile.
Not enough data to do that, so define a ‘novice’ teacher dummy picking out teachers with least experience.
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25. Table 4: GCSE Analysis
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26. Table 5: Value Added Analysis
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27. Table 6: Subject Differences
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28. Robustness checks
Leave out novices to just compare eligibles and ineligibles with pretty similar experience.
Ceiling effects on marks: just look at pupils in bottom 75% of KS3 distribution
Robust to these
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29. Evaluation
One standard deviation in the teacher-mean change in GCSE is 1.29, and 0.58 for VA
Coefficients on eligibility of for GCSE change and for VA change
As percentages of a standard deviation these are 69% and 73%
Alternatively, eligibility dummy is 67% of the novice teacher dummy for GCSE change, and 78% for VA change.
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30. Conclusions
Rich data, research design which controls for teacher and pupil effects
Results: around 0.5 GCSE grade per pupil
Caveats
Was it incentive pay and the experience-effectiveness profile
Extra effort or effort diversion?
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31. Additional slides
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32. Table 2: Summary teacher stats
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33. Table 3: Summary pupil stats
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34. Table 4: Comparative stats
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35. Data requested from schools
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39. Table 12: Distributional Impacts
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40. Table 13: Robustness checks
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