But...does it work?

Before charging forward with this idea about merit pay, it's important to step back and ask: does merit pay actually work? From an economic perspective, it seems like the obvious answer is yes. Tying pay to performance should incentivize better performance from teachers, which should then translate into better performance from students. But many people question this logic. After all, students are influenced by so many factors outside of the classroom- how can teachers be held so responsible for a student's performance? Also, is rewarding better teachers really the best way to increase students' performance?

Well, according to a new study that compared educational outcomes in countries with and without merit pay programs, the evidence in favor of merit pay is pretty overwhelming. To quote an article in Education Next,

"A little-used survey conducted by the OECD [Organisation for Economic Co-operation and Development] in 2005 makes it possible to identify the developed countries participating in PISA [Program for International Student Assessment] that appear to have some kind of performance pay plan. Linking that information to a country’s test performance, one finds that students in countries with performance pay perform at higher levels in math, science, and reading. Specifically, students in countries that permit teacher salaries to be adjusted for outstanding performance score approximately one-quarter of a standard deviation higher on the international math and reading tests, and about 15 percent higher on the science test, than students in countries without performance pay. These findings are obtained after adjustments for levels of economic development across countries, student background characteristics, and features of national school systems."

The full article with deeper analyses and helpful graphs can be found here.


The next step is conducting long-term research within the United States. There has been one study that claims that merit pay doesn't work because offering bonuses to less than 300 math teachers in one school district for three years did not dramatically increase student performance. There are a few problems with the study. The first is that the benefits of merit pay must be enjoyed by students throughout their entire education. A year or two (many students did not have teachers who participated in the merit pay program for more than one year) with a competent teacher is simply not enough to boost student performance in any significant way. Secondly, the bonuses were tied exclusively to better performance on standardized tests-- a metric that most teachers and policy makers agree does not form a comprehensive assessment of teacher performance. Lastly, the study acknowledges that the sample size (less than 300 teachers for the same age group in the same school district) is not large enough to provide many fair answers.

As districts and states implement real merit pay programs that span across grades, it will be easier to measure their effectiveness. The Merit Pay International Study is compelling because its examines countries that have adopted merit pay systems as their norm, which allows researchers to measure long term effects on individual students' performance. More research must be conducted, but the results of merit pay on a global scale are promising.