Association for Public Policy Analysis & Management

Public schools in the United States largely compensate their teachers on a group-based (unionized) payroll structure. However, the human capital theory has suggested such a mechanism is not effective in improving student achievement (Gritz & Theobald, 1996). To foster improvements in public school human capital management system, the U.S. Congress created the Teacher Incentive Fund (TIF) initiative that aims to introduce performance measures into educator compensation.

While the ultimate goal of TIF is to improve student achievements, quality teachers are considered the prerequisite for effective student learning. Thus TIF is so designed as to retain effective teachers by rewarding their performance. The economic theory seems to justify this mechanism and previous studies also find that money influences teachers’ decision to stay, transfer, and exit the school or school district (Gritz & Theobald, 1996; Imazeki, 2005; Springer, Swain & Rodriguez, 2016). Yet, the effectiveness of performance-based compensation in retaining teachers has not been empirically examined. This study aims to fill this literature gap by focusing on the quasi-experimental evaluation of the Broward County Public School District in Florida, the largest urban TIF grantee in the nation. Specifically, we examine the causal effect of the TIF grant on teacher attrition rates using a regression discontinuity design and a difference in difference analysis.

The findings of this research provide evidence on whether TIF is able to achieve one of its most important goals of reducing teacher attrition and have important implications on how to design a more effective educator compensation mechanism.