Overview. Paying Teachers to Perform: The Effects of Bonus Pay in Pernambuco, Brazil. Washington, DC December 7, 2011

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1 Paying Teachers to Perform: The Effects of Bonus Pay in Pernambuco, Brazil Washington, DC December 7, 2011 Barbara Bruns, Lead Education Economist, Latin America and The Caribbean Region Claudio Ferraz Professor of Economics Pontifical Catholic University (PUC) Rio de Janeiro, Brasil Jessica Rodriguez,World Bank Tassia Cruz, Vitor Pereira (consultants) Overview Global evidence on bonus pay: what do we know? What do we need to know? Brazilian education context Education context in Pernambuco and the bonus pay program PE Evaluation design: Impact of first year (discontinuous) targets on school performance - RD Impact of first round bonus attainment/not on school performance RD Impact of introducing bonus pay on system-wide performance Dif-in-dif Bonus pay and teachers classroom practice - panel of classroom observations Bonus pay and schools social capital - survey of school directors Results to date Next Steps 1

2 Pay for performance: global experience Increasingly common in OECD and MICs Annual bonus pay: Rewards for individual teachers Rewards for schools Performance incentives strongest if individual teachers are rewarded for their students learning progress, but hard to do Requires testing all grades and subjects twice a year Relatively expensive (20% of wage bill) compared to information and SBM (but not compared to across-theboard wage increases) Most systems adopt school-based (group) bonuses What is the evidence on Pay for Performance? Country India: Andhra Pradesh: Israel: Kenya: Rajasthan: Approach Annual bonus based on student test scores both schoollevel and individual (RCT) Individual bonus for teacher attendance (RCT) Individual bonus based on student test results (RD) School bonus based on multiple student performance measures (tests, graduation rates, credits taken) (RD) School bonus based on student test results (RCT) (preschools): individual bonus for teacher attendance (RCT) Brazil: Chile (SNED): Pernambuco, Rio, SP, MG School bonus based on student test results and grade progression (RD, DD) School bonus based on multiple measures (tests and other school factors) (DD) 2

3 What is the evidence on Pay for Performance? Country India: Andhra Pradesh: Predicted Strength, Core Design 4.7(indiv) 4.3 (group) Average Bonus Value (% MW) Observed Effect Size (Max.) Rajasthan: Israel: 4.3(indiv) % higher pass rates and 10% higher test scores 2.7(group) Kenya: Brazil: Pernambuco, Chile: What is the evidence on Pay for Performance? 3

4 What is the evidence on Pay for Performance? Bonus pay raised student learning outcomes SD (highest for individual teacher incentives in India) Latest US evidence is different: even large bonuses have no impact on student results (Nashville, NYC) In some cases, bonus lowered teacher absence, but not always (puzzling) Most consistent pathway was extra teacher effort out of school Research frontier now is to explain these results: Design features Controllability (noise in performance measure + locality) Size of bonus Coverage/predictability of bonus Deepen understanding of how incentives change teacher behavior inside the classroom: Positive: stimulate teacher effort Negative: perverse behaviors Brazilian Educational Context 4

5 Brazilian Educational Context Decentralized system with high coverage and low quality 27 state systems and 5,500 municipal school systems - 40 million students, 1.9 million teachers, 200,000 schools National concern about education quality for 15 years and consistent reform efforts with some success (PISA improvement ) Teacher quality widely viewed as key issue non-selective entry into teacher training average salaries relatively low ((1 time GDP/cap) teacher vacancies in secondary education, esp. math and science Highly regarded national results measurement system IDEB (Index of Basic Education Quality) Prova Brasil/SAEB - census-based test of math and portuguese at 3 rd, 5 th and 9 th grade levels every two years and sample based 12 th grade test National school census data on student flows Politically visible, understandable composite IDEB score for all 27 state and 5,500 municipal school systems Ready-made framework for states to build on for annual school results measurement (SAEPE, SARESP, SAERJ) Pernambuco Educational Context 1,000 State schools (mainly grades 5-12) Approx. 1 million students Approx. 45% of total state enrollments Large schools (1,000 students and teachers/per school) Multiple shifts (morning, afternoon and secondary school at night) Many teachers work two jobs (one state and one municipal or private school) 5

6 Pernambuco Educational Context Initial School Sample (2009) Escolas observadas: 228 Total de municípios: 122 Pernambuco Educational Context Weak salary incentives for teachers (unified salary scale 90% of salary explained by age, years of experience and formal qualifications) Weak sanctions and supervision (no dismissal for poor performance or high absence) Limited results focus: School library 6 months into school year Never-used computer lab 6

7 Pernambuco Educational Context PE AL BA RN PB PA RJ SE PI AM RO AP CE GO MA DF MS RR ES MT TO MG RS AC PR SP SC IDEB Educational Quality Index, 2007 Ensino Fundamental 5th-8th Pernambuco PA PI AL RN SE AP PE AM BA GO MA RJ PB MT CE RO RR TO DF ES AC MS RS SP MG PR SC Ensino médio In 2007, Pernambuco was one of the states with the worst education quality in Brazil In 2008, the state government introduced a performance pay system for teachers: the Bonus de Desempenho Escolar (BDE) IDEB index Pernambuco School Performance Bonus: Design Government hired a public sector management consultancy firm to design the system Group incentive system - all teachers and school officials can gain (proportional to their salaries). Several targets per school: Targets for improvement in each cycle (lower primary/upper primary/secondary) and both math and portuguese Index incentivizes: performance on standardized tests (SAEPE/Prova Brasil) and increased pass rate of students in the cycle. 7

8 Targets sent to School Principals Program Implementation June 2008 Bonus Program announced Nov 2008 SAEPE exam Aug 2009 New targets Nov st round classroom observations May 2010 Bonus Paid Nov nd round classroom observations April 2011 Bonus paid Aug 2008 Targets sent to schools April 2009 Bonus paid Nov 2009 SAEPE/ Prova Brasil exam August 2010 New targets Dec 2010 SAEPE exam 8

9 Information on School Targets Visible at Schools How where targets defined? Two non-linearities To receive the bonus, schools must achieve at least 50% of the expected improvement. 9

10 Impact Evaluation Design: How do schools respond to targets? Strategy #1: Exploit discontinuities in Targets and Bonus Assignment Can answer question: How do schools respond to stretch targets? Method: Compare the performance of schools at discontinuities The gain needed to reach the 2008 target was discontinuous at the 25th and 50th percentiles of the 2005 IDEPE index Low performing schools in 2005 had to achieve a larger gain The 50% cutoff for bonus attainment meant some schools with very similar results received/didn t receive the bonus School Targets for 8 th grade Portuguese 10

11 Non-linearity in the Bonus % meta atingida Impact Evaluation Design: Did the bonus work? Strategy #2: Difference-in-differences Can answer the question: Did the Pernambuco state schools improve more than they otherwise would have after the introduction of the bonus? Method: exploit rich national and state-level performance data for the period pre- and post bonus to compare trends in: Pernambuco state schools with other Northeast states Pernambuco state schools with municipal schools in PE Pernambuco state schools with both (triple differences) 11

12 Impact Evaluation Design: HOW did the bonus work? Strategy #3: Classroom observations in a panel of 1800 classrooms in 300 schools Can answer questions: Do teachers behave differently in schools that achieve/don t achieve the bonus? Does teacher behavior change over time in Pernambuco state schools? Strategy #4: Surveys/interviews with school directors, teachers and regional supervisors Can answer questions: What explicit strategies did schools use to try to improve? How do these strategies correlate with bonus results? Pernambuco School Bonus Program Results Schools achieved 100% or more of targets Schools achieved 50-99% of targets Total, bonus recipients as % of all schools 51% 81% 70% Schools did not receive bonus Average teachers bonus (Rs) Total Schools given targets

13 Research Question 1: How did schools respond to the targets? Change in IDEPE, 8 th grade Portuguese 13

14 Change in IDEPE, 8 th grade Math Change in Math test scores, 12 th grade 14

15 Change in Portuguese test scores, 12 th grade Summary of Results (year 1): impact of discontinuities Discontinuities in the targets seemed to induce different school responses - In 8 th grade, especially for Portuguese, more ambitious targets stimulated larger improvement - large short-run improvement in Portuguese (O.3 SD conditional on 2005 SAEPE score) - In 12 th grade, mixed responses: as many cases of smaller improvement as larger No observed gaming (by restricting number of students that take the test) 15

16 Research Question 2: Did the bonus work? Prova Brasil: Portuguese 9 th grade- PE state vs. Northeast Municipal public schools in Pernambuco Year PE Rest of Northeast 16

17 Prova Brasil: Math 9 th grade- PE state vs. Northeast Public schools in Pernambuco Year PE Rest of Northeast Prova Brasil: Math 5 th grade- PE state vs. Northeast State public schools in Pernambuco Year PE Rest of Northeast 17

18 Prova Brasil: Pernambuco state vs. Northeast 5th year 9th year Language Math Language Math (1) (2) (1) (2) PE [0.036]** [0.039] [0.032]*** [0.031]*** Post [0.033]*** [0.036]*** [0.030]*** [0.026] PE Post [0.068] [0.080]** [0.061]*** [0.057]*** R-squared Observations 7,025 7,025 10,564 10,564 Prova Brasil: Portuguese 9 th grade- PE state vs. Municipalities in PE Municipal public schools in Pernambuco Year PE Rest Municipalities of Northeast 18

19 Prova Brasil: Math 9 th grade- PE state vs. Municipalities in PE Public schools in Pernambuco Year PE Rest Municipalities of Northeast Prova Brasil: Math 5 th grade- PE state vs. PE municipalities Municipal public schools in Pernambuco Year PE Rest of Northeast 19

20 Prova Brasil: Pernambuco state vs. Municipalities in PE 5th year 9th year Language Math Language Math (1) (2) (1) (2) State [0.043]*** [0.047]*** [0.052]*** [0.051]*** Post [0.036]*** [0.043]*** [0.070]*** [0.064]* State Post [0.079] [0.094]*** [0.092]*** [0.086]*** R-squared Observations 5,066 5,066 3,455 3,455 Prova Brasil: PE vs. Northeast vs. State/Mun 5th year 9th year Language Math Language Math (1) (2) (1) (2) PE [0.021]*** [0.023]** [0.040]*** [0.039]*** Post [0.015]*** [0.017]*** [0.025]*** [0.022]*** PE Post [0.034]* [0.040]*** [0.068]* [0.062]*** State school [0.020]*** [0.021]*** [0.022]*** [0.020]*** PE State school [0.042]*** [0.045]** [0.051] [0.050]** State school Post [0.036]*** [0.040]*** [0.039]*** [0.034]** PE State school Post [0.077]* [0.090] [0.092]** [0.084]*** Observations R-squared 34,683 34,683 23,590 23,590 20

21 Bonus Impact on Student Learning Positive results for the ninth grade, both Portuguese and Math. SD increased from 0.22 to 0.40 depending on the specification. Little or no effect for the fifth grade. But Prova Brasil uses a small sample of municipal-operated public schools. What happened to pass rates? Pass rate upper grades: Pernambuco vs. Other Northeast States Pass rate 6th-9th Pass rate 6th Pass rate 7th Pass rate 8th Pass rate 9th (1) (2) (3) (4) (5) PE [0.398]*** [0.502]*** [0.449]*** [0.429]*** [0.473]*** Post [0.316]*** [0.428]*** [0.378]** [0.347]*** [0.317]*** PE Post [0.667]*** [0.845]*** [0.757]*** [0.714]*** [0.767]*** Mean dep. var Observations R-squared 10,814 9,837 10,152 10,444 10,715 Increase 10% in the pass rate 21

22 Pass rate upper grades: Pernambuco vs. Northeast vs. State/Mun Pass rate 6th-9th Pass rate 6th Pass rate 7th Pass rate 8th Pass rate 9th (1) (2) (3) (4) (5) PE [0.435]*** [0.580]** [0.502]*** [0.476] [0.521]*** Post [0.239]*** [0.307]*** [0.272]*** [0.259]*** [0.239]*** PE Post [0.616] [0.837] [0.722] [0.684]* [0.726] State school [0.251]*** [0.331] [0.294] [0.281] [0.258]*** PE State school [0.590]*** [0.768]*** [0.673]* [0.640]*** [0.704]*** State school Post [0.396]*** [0.527]*** [0.466]*** [0.433]*** [0.397]*** PE State school Post [0.908]*** [1.190]*** [1.046]*** [0.989]*** [1.056]*** Mean dep. var R-squared Observations 24,219 23,090 23,415 23,661 23,980 Pass rate lower grades: Pernambuco vs. Northeast vs. State/Mun Pass rate 1th-5th Pass rate 1th Pass rate 2th Pass rate 3th Pass rate 4th Pass rate 5th (1) (2) (3) (4) (5) (6) PE [0.245]*** [0.452] [0.405] [0.284]*** [0.289]*** [0.297]*** Post [0.149]*** [0.220]*** [0.235]*** [0.201]*** [0.186]*** [0.176]*** PE Post [0.339] [0.524]*** [0.581]*** [0.458]*** [0.437]* [0.436]*** State school [0.234]** [0.518]*** [0.384]*** [0.319] [0.280] [0.273]*** PE State school [0.452]*** [0.987]*** [1.032]*** [0.688]*** [0.533]*** [0.574]*** State school Post [0.360]*** [0.693]* [0.612]*** [0.511] [0.467]*** [0.438]** PE State school Post [0.702] [1.296] [1.433]* [1.129]** [0.822]*** [0.910]*** Mean dep. var Observations R-squared 36,036 19,407 32,409 33,293 34,542 35,480 Null effect or very small 22

23 Overall Bonus Impact Both Portuguese and Math test scores and pass rates improved significantly in the 9 th grade Smaller effects in the 5 th grade, in both test performance and pass rate Why? Secretariat believes reason is less state school influence on 5 th grade student performance 5 th grade is year most students transfer from municipal (lower primary) to state (upper primary) schools State policies such as bonus likely to have cumulative results Research Question 3: HOW did the bonus work? 23

24 Bonus Pay and Teacher Classroom practice in Pernambuco Stallings classroom snapshot instrument What does it measure? 1. Teacher s use of instructional time 2. Use of materials, including ICT 3. Core pedagogical practices 4. Ability to keep students engaged How does it work? 10 observations of each class taken at regular intervals and coded using a standardized grid 24

25 School No.: Classroom No. Exact time of observation: OBSERVATION CODING GRID MATERIAL NO MATERIAL TEXTBOOK NOTEBOOK BLACK BOARD LEARNING AIDES ICT COOPERATIVE ACTIVITY 1. READING ALOUD 2.DEMONSTRATION/ LECTURE T 1 S L E 1 S L E 1 S L E 1 S L E 1 S L E 1 S L E S L E I 1 S L 1 S L 1 S L 1 S L 1 S L 1 S L S L CHECK IF CHORAL READING 1 S L E 1 S L E 1 T S L E 1 S L E 1 S L E 1 S L E S L E I 1 S L 1 S L 1 S L 1 S L 1 S L 1 S L S L 3. DISCUSSION/QUESTIONS AND ANSWERS 4. PRACTICE & DRILL 5. ASSIGNMENT/ CLASS WORK 6. COPYING T 1 S L E 1 S L E 1 S L E 1 S L E 1 S L E 1 S L E S L E I 1 S L 1 S L 1 S L 1 S L 1 S L 1 S L S L T 1 S L E 1 S L E 1 S L E 1 S L E 1 S L E 1 S L E S L E I 1 S L 1 S L 1 S L 1 S L 1 S L 1 S L S L T 1 S L E 1 S L E 1 S L E 1 S L E 1 S L E 1 S L E S L E I 1 S L 1 S L 1 S L 1 S L 1 S L 1 S L S L T 1 S L E 1 S L E 1 S L E 1 S L E 1 S L E 1 S L E S L E I 1 S L 1 S L 1 S L 1 S L 1 S L 1 S L S L 7. VERBAL INSTRUCTION 8. SOCIAL INTERACTION 9. STUDENT(S) UNINVOLVED T 1 S L E 1 S L E 1 S L E 1 S L E 1 S L E 1 S L E S L E I 1 S L 1 S L 1 S L 1 S L 1 S L 1 S L S L T 1 S L E I 1 S L I 1 S L T 1 S L E 10. DISCIPLINE 11. CLASSROOM T 1 S L E MANAGEMENT I 1 S L 12. CLASSROOM MANAGEMENT ALONE T 13. TEACHER SOCIAL INTERACTION OR TEACHER UNINVOLVED T 14. TEACHER OUT OF THE ROOM T Coding grid FIGURE 1: EXCERPT FROM CLASSROOM SNAPSHOT (APPENDIX 2) CLASSROOM OBSERVATION SNAPSHOT MATERIAL ACTIVITY 1. READING ALOUD NO MATERIAL TEXTBOOK NOTEBOOK T 1 S L E 1 S L E 1 S L E BLACK BOARD 1 S L E LEARNING ICT COOPERATIVE AIDES 1 S L E 1 S L E S L E I 1 S L 1 S L 1 S L 1 S L 1 S L 1 S L S L CHECK IF CHORAL READING T line: Indicates activities that involve the teacher I line: Indicates activities that involve the student & not the teacher 1, S, L, E: Indicate one individual, a small, large group and entire class respectively 25

26 School and Classroom Demographic information #1 Brazil is far from the OECD benchmarks 26

27 #2 Time spent on instruction is correlated with learning outcomes (Rio de Janeiro 5th grade) 5 th grade * Statistically Significant at 10% ** at 5% #3 Time spent on instruction predicted bonus pay (Pernambuco) ** Statistically significant at 5% *** at 1% 27

28 Analysis of Panel of 200 Schools in Pernambuco 2009 and 2010 (after introduction of school bonus program) Slight increase in instructional time and decline in class management but no change in teacher absence from the class 28

29 Increase in teacher effectiveness keeping ALL students engaged (share of time entire class engaged with teacher) Small Group: 2 to 5 students Large Group: More than 5 students What is the evidence on Pay for Performance? PE PE PE 29

30 Summary: what are we learning from Pernambuco? Bonus pay can stimulate improvement in key school results within 1-2 years Size of incentive and clarity/integrity of results measure important Early evidence that it is possible to observe differences in classroom dynamics between improving and stagnant schools, and system-wide over time Important design questions in setting up bonus pay programs Linear or nonlinear? (everyone gets it or only those that pass a threshold for improvement) Reward level of performance, value-added, or both? Should schools that remain at the top be rewarded (PE vs SP)? Should targets be multi-year? Renegotiated annually? Summary: next phase of Brazil incentives research What strategies DO schools most commonly employ in response to bonus incentives? (2012 qualitative survey and study) How does school size (free-rider potential) and school social capital affect bonus attainment? (2012 analysis of existing survey data) Does classroom-level improvement continue over time? Does it correlate with bonus? (panel of observations continuing in 2012 and 2013) How to design effective bonus pay programs? (Comparative study of 3 yr. results in 3 different Brazilian programs MG, PE, RJ 2012/13) Size of bonus? Linear or nonlinear targets? Reward level of performance, value-added, or both? Multi-year targets or renegotiated annually? Do perverse impacts arise over time (as agents become more familiar with program and potential gaming strategies)? 30

31 Muito Obrigados! Barbara Bruns Claudio Ferraz 31

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