An analysis of existing research on teacher merit pay programs reveals that the highly debated practice is having a positive effect on student outcomes, according to a new Vanderbilt University report.
Teacher merit pay, also known as incentive pay, performance pay and pay-for-performance, offers financial incentives to teachers who meet certain criteria, usually involving improved student test scores.
Despite substantial opposition on several fronts, teacher merit pay programs are growing in popularity with considerable political and financial support. The federal government has awarded more than $2 billion in more than 30 states to design and implement performance pay systems. Under this spotlight, numerous research studies have been conducted over the last decade to evaluate merit pay’s effectiveness.
The new Vanderbilt report was co-led by Matthew G. Springer, assistant professor of public policy and education at Vanderbilt’s Peabody College of education and human development, and two Peabody College doctoral students, Lam D. Pham and Tuan D. Nguyen. They searched through more than 19,000 research reports before focusing on 44 primary studies.
“We found overall that the presence of a merit pay program was associated with a modest, but statistically significant, positive effect on student test scores,” Springer said. “Approximately 74 percent of the effect sizes recorded in our review were positive. The influence was relatively similar across the two subject areas, mathematics and English language arts.”
Among studies conducted in U.S. schools, the academic increase was roughly equivalent to adding three additional weeks of learning to the school year.
“These general findings continue to hold even when we restrict our analysis to those studies utilizing the most rigorous methods,” Nguyen said.
Not all merit pay programs yielded equal results, however. Program impacts varied depending on the design of the incentive pay scheme. For example, merit pay programs rewarding teams of teachers produced an effect almost twice as large those rewarding merit raises on rank-order. That finding lends support to the shared nature of teaching and learning in schools.
“We found that effect sizes were highly sensitive to program design and study context,” Pham said. “This suggests that, while some merit pay programs have the potential to improve student test scores in some contexts, the more pertinent question that researchers and policymakers should consider is how the program is structured and implemented.”
Emerging studies also suggest that merit pay can improve teacher recruitment and retention, which has been found to contribute to many positive outcomes for students, particularly those in low-income areas. Springer suggests continued investigation into teacher labor market outcomes, especially the effects of pay incentives on the mobility patterns of highly effective teachers, and the exit decisions of traditionally low-performing teachers.
Download a PDF of “Teacher Merit Pay and Student Test Scores: A Meta-Analysis.”