Incentive Design in Education: An Empirical Analysis

NBER Working Paper No. 21835

Issued in December 2015

NBER Program(s):Children, Economics of Education, Labor Studies, Public Economics



While incentive schemes to elicit greater effort in organizations are widespread, the incentive strength-effort mapping is difficult to ascertain in practice, hindering incentive design. We propose a new semi-parametric method for uncovering this relationship in an education context, using exogenous incentive variation and rich administrative data. The estimated effort response forms the basis of a counterfactual approach tracing the effects of various accountability systems on the full distribution of scores. We show higher average performance comes with greater score dispersion for a given accountability scheme, and that incentive designs not yet enacted can improve performance further, relevant to education reform.

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Document Object Identifier (DOI): 10.3386/w21835

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