To Introduce or Not To Introduce Monetary Bonuses: The Cost of Repealing Teacher Incentives
Teacher performance pay programs form the foundation of recent reforms in public education. Although existing research has found monetary bonuses for teachers increase student achievement, no studies have examined the potentially negative effects of repealing such incentives. Using novel data from North Carolina, where the state government first reduced and finally repealed its teacher incentive program, this paper shows that student achievement at the lowest-performing schools significantly decreased after the reduction in bonuses and further decreased after the repeal of the incentive program. These findings illustrate that once incentives are introduced it is not cost-free to reduce or remove them.