A central goal of performance pay and test-based evaluations for teachers is to provide incentives that bring about increases in the productivity levels of the teacher labor force (e.g. Dee and Keys, 2004; Podgursky and Springer, 2007). Based on the current body of evidence, performance pay programs and test-based evaluations have not been that effective in increasing student achievement (Sawchuck, 2010). There are several plausible explanations as to why these programs have failed to produce such results (e.g. weak reward designs; political opposition; short lifespans of these programs; etc.). However, this panel takes a different route and specifically examines school administrator and teacher responses and behaviors with regard to performance pay. Examining the influences that these policies have on teacher and administrator behaviors provides insight as to why performance pay programs as well as other test-based policies fail to produce their intended results. For example, when assessing the value of performance pay programs, could it be that a lack of teacher buy-in with these programs radically undermines their effectiveness? Moreover, could these incentive-based programs hold more promise in the possibility of producing long-term, systemic shifts by bringing about changes in the composition of the teacher labor force? By incentive-based policies from these perspectives, the findings of this panel should better inform policymakers on how to shape policy and avoid potential unintended, intermediate consequences. This panel includes two papers that examine the influence that performance pay programs might have on the composition of the teacher labor force. The first paper examines whether districts offering some form of performance pay attract higher quality teachers. The second paper investigates whether teachers, selecting into schools with performance pay, have fundamentally different characteristics and preferences that also happen to predict higher student achievement. The other two papers examine how teachers and schools respond to incentive-based policies. The third paper examines how schools, serving disadvantaged students, behave when given the opportunity to hire high value-added teachers that have been provided a $20,000 incentive to teach there. Finally, the fourth paper investigates how teachers as well as non-teaching faculty respond, both behaviorally and attitudinally, to their school implementing a merit pay program.