Giving Compass' Take:

• In Indonesia, unconditional teacher salary increase improved teachers' job satisfaction and overall happiness but did not improve job performance.

• Is increased happiness and job satisfaction on its own a worthwhile reason to increase teacher pay? Over decades, could this pay increase result in higher quality teachers?

• Unconditional salary increase is not the only way to increase teacher pay. See how a pay-for-performance worked in New York.

Our study was conducted in the context of a policy change in Indonesia that permanently doubled the base pay of eligible civil-service teachers who went through a certification process.

Given the large fiscal burden of the policy, teacher access to the certification program was phased in over 10 years (from 2006 to 2015), with priority in the queue being determined by seniority. Thus, many eligible teachers had to wait several years before being allowed to enter the certification process. Working closely with the government of Indonesia, we implemented an experimental design that took advantage of this phase-in.

It allowed all eligible teachers in 120 randomly selected public schools to access the certification process and the resulting doubling of pay immediately; in contrast, teachers in control schools experienced the “business as usual” access to the certification process through the gradual phase-in over time.

Our experiment successfully accelerated access to the certification process and doubling of pay for eligible teachers in treatment schools.

The experiment significantly improved measures of teacher welfare: at the end of two and three years of the experiment, teachers in treated schools had higher income, were more likely to be satisfied with their income, and were less likely to report financial stress. They were also less likely to hold a second job, and they worked fewer hours on second jobs.

Yet despite this improvement in incumbent teachers’ pay, satisfaction, and time available to focus on their main job (owing to a reduction in second jobs), the policy did not improve either teachers’ effort or student learning.

These results suggest that several posited mechanisms by which an unconditional salary increase could lead to improved effort and productivity of incumbent workers may not have applied in our setting.

Read the full article on unconditional teacher salary increase by Joppe de Ree, Menno Pradhan, and Halsey Rogers at Cato Institute