The Fraser Institute

The Fraser Institute

September 08, 2014 06:15 ET

The Fraser Institute: Evidence Shows Teacher Incentive Pay Improves Student Performance

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Sept. 8, 2014) - Incentive pay for teachers improves student performance, finds a new study released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

The study, Teacher Incentive Pay that Works, examines several teacher incentive pay programs based on student performance in school systems around the world.

"Other professions attract and retain talented people with incentive pay based on job performance, so it would seem reasonable for the teaching profession, with its huge impact on children and society, to follow suit," said Deani Van Pelt, director of the Fraser Institute's Barbara Mitchell Centre for Improvement in Education.

Teacher incentive pay comes in many forms, from annual bonuses tied to student test scores to salary increases that reward teachers for student achievement gains. In Canada, however, public school teacher salaries are negotiated by teacher unions and based solely on seniority and credentials (i.e. degrees, certificates). Student achievement is not considered.

Yet, notes the study, incentive pay programs have borne fruit worldwide.

For example, from 2004/05 to 2006/07 in Little Rock, Arkansas, teacher bonuses at three elementary schools (in low-income neighbourhoods) were based solely on student achievement. After just one year, student scores in math, reading and language improved, most noticeably in the classrooms of teachers with poor records of student performance.

Overseas, during a five-year study last decade involving 200 rural schools in Andhra Pradesh, India's fifth largest state, researchers found marked student improvement in schools with incentive pay. Interestingly, student performance improved in two subjects (science and social studies) that were not part of the incentive pay program. The conclusion: incentive pay programs can improve overall teacher effectiveness-the Andhra Pradesh teachers didn't simply "teach to the test," a common charge of incentive pay opponents.

"Teachers respond to incentives by changing the way they teach. They are aware of their own effectiveness, and even highly effective teachers want to improve, for themselves and their students," said Vicki Alger, study author and Fraser Institute senior fellow.

The study also notes that the majority of teachers who participate in incentive pay programs support the idea of linking pay to student achievement, despite union opposition.

So what does this mean for Canadian policy-makers?

While Canada ranks among the world's top educational performers, overall student performance is waning, particularly in math and sciences. There's a wide gap in student performance among provinces and territories and chronically low performance levels in many Aboriginal communities.

"Today in Canada, all teachers, no matter their performance or work ethic, receive automatic yearly pay raises-excellence goes unrewarded, mediocrity goes unaddressed. We should want much better for such a critically important profession," Van Pelt said.

"The evidence suggests that incentive pay programs, when properly designed and implemented, improve student performance even among the most disadvantaged student populations, and are more cost-effective than across-the-board pay raises and class-size reductions," Alger said.

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The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of think-tanks in 87 countries. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit

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