Double for Nothing? Experimental Evidence on an Unconditional Teacher Salary Increase in Indonesia*

Abstract

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Does Rewarding Pedagogical Excellence Keep Teachers in the Classroom?: Evidence from a Voluntary Award Program

“…First, education ministries already spend around 60 percent of their budget on teachers' compensation (OECD, 2017) and large wage increases across the board may be economically and politically unfeasible. Second, and more importantly, higher wages may not lead to more effort (and ultimately better student outcomes) because these increases are not necessarily related to better teacher performance (De Ree et al, 2018).…”

“…More closely, a set of papers address the issue of how to compensate public sector workers in developing countries (e.g., Dal Bó et al, 2013;de Ree et al, 2018). Within this literature, we raise an important point and it is that the outside option of these workers might not be associated 9 In the private sector, the classic example of Lazear (2000) shows that the introduction of a piece wage rate-as opposed to a fixed wage rate-increases effort and generates sorting with less productive workers leaving the firm.…”

Primary Education in Remote Indonesia

“…So if a certified civil servant teacher works in remote area, he or she could be entitled to a total income of up to three times his/ her base salary. While significantly increasing teachers' income might seem like a significant incentive for teachers to improve their performance, a World Bank study on the impact of certified teachers on student learning outcomes does not find that this is the case (De Ree et al, 2018). Similar outcome was identified for Tunjangan Khusus, where recipients had highest rate of absenteeism in comparison to non-recipients (Toyamah et al, 2010).…”

Pay by Design: Teacher Performance Pay Design and the Distribution of Student Achievement

“…Possibly due to a lack of explicit incentives to improve student outcomes, teacher absenteeism is pervasive in many parts of the world (Kremer et al 2005;Banerjee and Duflo 2006;Chaudhury et al 2006) and teachers often fail to teach effectively when present (Chaudhury et al 2006;Staiger and Rockoff 2010). Policies that unconditionally increase teacher salaries -but do not provide incentives -may further fail to improve teacher effort or student learning (de Ree et al 2015). In response, a growing movement seeks to better align teacher incentives by linking teacher pay more directly to student achievement, and performance pay programs are increasingly common in both developed and developing countries (OECD 2009;Hanushek and Woessmann 2011;Bruns et al 2011;Woessmann 2011).…”