Merit pay international

Achievement is higher in countries that pay teachers for outstanding performance, concludes an analysis of PISA data by Ludger Woessmann, a University of Munich economics professor.

(Students in performance-pay countries) score approximately one-quarter of a standard deviation higher on the international math and reading tests, and about 15 percent higher on the science test, than students in countries without performance pay. These findings are obtained after adjustments for levels of economic development across countries, student background characteristics, and features of national school systems.

. . . Since one-quarter of a standard deviation is roughly a year’s worth of learning, it might reasonably be concluded that by the age of 15, students taught under a policy regime that includes a performance pay plan will learn an additional year of math and reading and over half a year more in science. However, this conclusion depends on the many assumptions underlying an analysis based on observational data.

Twelve of 27 OECD countries with PISA data report incentive pay for outstanding teachers, but the pay schemes vary considerably.  For example, outstanding performance may be measured “based on the assessment of the head teacher (Portugal), assessments performed by education administrators (Turkey), or the measured learning achievements of students (Mexico,” Woessmann writes. Countries in Scandinavia (Denmark, Finland, Norway, and Sweden) and Eastern Europe (Czech Republic and Hungary)  are the most likely to use performance pay.


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