How does a large unconditional increase in salary affect the performance of incumbent employees in the public sector? This paper presents experimental evidence on this question in the context of a policy change in Indonesia that led to a permanent doubling of teachers' base salaries. The analysis uses a large-scale, randomized experiment across a representative sample of Indonesian schools that accelerated this pay increase for teachers in treated schools. The findings show that the large pay increase significantly improved teachers' satisfaction with their income, reduced the incidence of teachers holding outside jobs, and reduced self-reported financial stress. Nevertheless, after two and three years, the increase in pay led to no improvement in student learning outcomes. The effects are precisely estimated, making it possible to rule out even modest positive impacts on test scores. The results suggest that unconditional pay increases are unlikely to be an effective policy option for improving the effort and productivity of incumbent employees in public sector settings.
Details
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Author
Pradhan,Menno Prasad, Rogers,F. Halsey, Muralidharan,Karthik, De Ree,Joppe Jaitze
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Document Date
2017/12/04
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Document Type
Policy Research Working Paper
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Report Number
WPS8264
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Volume No
1
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Total Volume(s)
1
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Country
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Region
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Disclosure Date
2017/12/04
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Disclosure Status
Disclosed
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Doc Name
Double for nothing ? experimental evidence on an unconditional teacher salary increase in Indonesia
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Keywords
Teachers;education for all;certification process;representative household survey data;high rate of absenteeism;Annual Pay Increase;student learn outcome;number of teachers;access to certification;junior secondary school;law and regulation;local labor market;labor force survey;fiscal deficit target;public sector job;quality of job;improve Education Quality;school education system;primary school enrollment;increase in income;test of equality;absence of evidence;higher teacher salary;total government spending;
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Citation
Pradhan,Menno Prasad Rogers,F. Halsey Muralidharan,Karthik De Ree,Joppe Jaitze
Double for nothing experimental evidence on an unconditional teacher salary increase in Indonesia (English). Policy Research working paper,no. WPS 8264 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/616961512396126770/Double-for-nothing-experimental-evidence-on-an-unconditional-teacher-salary-increase-in-Indonesia