The IMPACT of Incentives and Evaluations on Teacher Performance

Teachers in the United States are compensated largely on the basis of fixed schedules that reward experience and credentials. However, there is a growing interest in whether performance-based incentives based on rigorous teacher evaluations can improve teacher retention and performance. The evidence available to date has been mixed at best.

This study presents novel evidence on this topic based on IMPACT, the controversial teacher-evaluation system introduced in the District of Columbia Public Schools by then-Chancellor Michelle Rhee. IMPACT implemented uniquely high-powered incentives linked to multiple measures of teacher performance (i.e., several structured observational measures as well as test performance).

The study compares the retention and performance outcomes among low-performing teachers whose ratings placed them near the threshold that implied a strong dismissal threat and the outcomes among high-performing teachers whose rating placed them near a threshold that implied an unusually large financial incentive.

The results indicate that dismissal threats increased the voluntary attrition of low-performing teachers by 11 percentage points (i.e., more than 50 percent) and improved the performance of teachers who remained. The study also finds evidence that financial incentives further improved the performance of high-performing teachers.