Teacher Performance Pay and Student Learning: Evidence from a Nationwide Program in Peru

Abstract

We study the impact of a nationwide teacher pay-for-performance program in Peru. Public secondary schools compete in a tournament based on eighth graders’ performance in a standardized test. The principal and teachers of winning schools receive a substantial bonus. We perform a difference-in-differences estimation comparing the internal grades of eighth and ninth graders of the same school, before and after the program. We find a precisely estimated zero effect on student achievement, which could be a consequence of teachers’ uncertainty about how to improve their students’ performance in the standardized test tied to the bonus.