Effects of individual incentive reforms in the public sector: the case of teachers

Martins, Pedro S. and Ferreira, Joao R. (2025) Effects of individual incentive reforms in the public sector: the case of teachers. Public Choice. ISSN 0048-5829

Text (s11127-024-01256-z) - Published Version Available under License Creative Commons Attribution. Download (941kB)

• https://www.webofscience.com/api/gateway...
• Scopus publication

Abstract

Can incentive schemes deliver value in the public sector, despite major principal-agent challenges? We evaluate a reform that introduced individual teacher performance-related pay and tournaments in public schools in Portugal, despite trade union opposition. We find evidence that the focus on individual performance decreased student achievement (as measured by national exams) and increased grade inflation. The results follow from a difference-in-differences analysis of matched student-school panels and two complementary control groups (including private schools). Students with a higher proportion of teachers exposed to tournaments also perform worse. Overall, our results highlight the social costs of disrupting workers’ cooperation, a possible unintended consequence of public-sector tournaments.

Item Type:	Article
Additional Information:	© 2025 The Author(s)
Divisions:	LSE
Subjects:	L Education > LB Theory and practice of education
JEL classification:	D - Microeconomics > D7 - Analysis of Collective Decision-Making > D78 - Positive Analysis of Policy-Making and Implementation M - Business Administration and Business Economics; Marketing; Accounting > M5 - Personnel Economics > M52 - Compensation and Compensation Methods and Their Effects (stock options, fringe benefits, incentives, family support programs, seniority issues) I - Health, Education, and Welfare > I2 - Education > I28 - Government Policy
Date Deposited:	12 Feb 2025 08:24
Last Modified:	18 Feb 2025 08:55
URI:	http://eprints.lse.ac.uk/id/eprint/127285

Actions (login required)

View Item