APL (Ajiken Power Lunch)

APL (Ajiken Power Lunch) is a lunchtime workshop open to public, including IDE staffs, visiting research fellows, IDEAS students, outside researchers and graduate students. This workshop provides a platform for presentation of any work in progress where we can discuss in either English or Japanese.

Those who would attend a seminar are asked to announce yourself to receptionists on your arrival at the IDE and to obtain APL Organizers' signature on your admission card after the seminar.

July 21, 2015. (Tuesday) 10：30-12：00

Institute of Developing Economies, Japan External Trade Organization C23 Meeting Room 　

Double for Nothing? Experimental Evidence on the Impact of an Unconditional Teacher Salary Increase on Student Performance in Indonesia

How does a large unconditional increase in salary affect employee performance in the public sector? We present the first experimental evidence on this question to date in the context of a unique policy change in Indonesia that led to a permanent doubling of base teacher salaries. Using a large-scale randomized experiment across a representative sample of Indonesian schools that affected more than 3,000 teachers and 80,000 students, we find that the doubling of pay significantly improved teacher satisfaction with their income, reduced the incidence of teachers holding outside jobs (and the hours worked on them), and reduced self-reported financial stress. Nevertheless, after two and three years, the doubling in pay led to no improvements in measures of teacher effort or student learning outcomes, suggesting that the salary increase was mostly a transfer to teachers with no discernible impact on student outcomes. While higher salaries may increase teacher quality on the extensive margin in the long-run, we find no evidence of meaningful positive impacts of teacher salary increases on student learning from intensive margin increases in teacher effectiveness as predicted by gift-exchange, and efficiency wage models of employee behavior.

Menno Pradhan (Professor, University of Amsterdam)

Yuya KUDO

English