Dive Brief:

• Merit pay programs for teachers are associated with a significant increase in student test scores, according to a new review of 37 studies, including 26 conducted in the U.S. But the effects depend of how the program is designed.
• Programs combined with professional development produced the greatest results. “Integrating merit pay with effective professional development opportunities suggests an important route for future research into pay incentives,” wrote the researchers, led by Lam Pham of Vanderbilt University. They note even if teachers are working harder, they may not always know how to improve their practices.
• Higher award amounts also produced stronger results, as did programs that provide merit pay to top-ranking teachers rather than to a group of teachers. Results in elementary schools were greater than at the middle school level. There were not enough studies at the high school level to provide a reliable estimate. 

Dive Insight:

Merit pay, also called pay-for-performance or performance pay, is based on the belief teachers would work harder to improve student performance if they were paid extra for their efforts. But critics of such programs have said student outcomes are affected by a lot that teachers can’t control, and that at higher grade levels, students have multiple teachers and it’s not always clear which teacher contributed to the gains. 

Such a program was the primary issue in last year's strike in Denver Public Schools, where teachers argued the district’s ProComp system, which was meant to attract and retain high-quality teachers to underperforming schools and hard-to-fill positions, had grown too complex and made it difficult for teachers to predict their income from year to year.

The researchers identified differences between merit-pay programs inside and outside the U.S. The programs outside the U.S. tend to last longer — 5.9 years compared to 3.5 years in the U.S. — and the award amounts in other countries tend to be larger, which could explain why the impact of those programs was greater.

But they also note the effectiveness of the programs seems to wear off after several years, maybe “because similar teachers continue to win the awards and come to expect them as part of their standard salary whereas teachers who consecutively fail to win incentives stop seeing them as attainable,” the authors wrote.

They also tested whether the positive impact on student performance extended to areas that weren't part of the criteria for receiving the bonus, but found that not to be the case. “Perhaps teachers are teaching only test-taking skills, focusing solely on the incentivized test, or even cheating,” they wrote, “but authorities hoping to implement merit pay would do well to expect only effects on the incentivized outcome.”

Other research has shown principals play an important role in understanding performance pay systems, explaining them to teachers and ensuring good two-way communication between the district and teachers.