This post reviews a study by Roland Fryer, Jr., in the peer-reviewed Journal of Labor Economics. Fryer analyzed the results of New York City’s merit pay program and found that it made no difference on several levels.
“A randomized experiment, a gold standard in applied work of this kind, was implemented in more than 200 hundred NYC public schools. The schools decided on the specific incentive scheme, either team or individual. The stakes were relatively high – on average, a high performing school (i.e. a school that meets the target by 100%), received a transfer of $180,000, and a school that met the target by 75%, received $90,000. Not bad by all accounts!
“The target was set based on a school performance in terms of students’ achievement, improvement, and the learning environment. Yes, a fraction of schools met the target and received the transfers, but it did not improve the achievement of students, to say the least. If anything, such incentive in fact worsened the performance of students….Not only that, but the incentive program had no effect on teachers’ absenteeism, retention in school or district, nor did it affect the teachers’ perception of the learning environment in a school. Literally, the estimated 75 million dollars invested and spent brought zero return!”