Can Financial Incentives Help Disadvantaged Schools to Attract and Retain High-Performing Teachers? Evidence from Chile

Extensive sorting of high-performing teachers into the most advantaged schools contributes to the wide socioeconomic achievement gaps in many countries. The Chilean Pedagogical Excellence Assignment (AEP) pays bonuses to high-performing teachers that are larger if they work at a disadvantaged school. Using a sharp regression discontinuity based on the program's eligibility rules, we estimate how the award affects where high-performing teachers choose to work. The bonus, equivalent to 16 percent of an average annual salary, increased retention of high-performing teachers in disadvantaged schools by 17 to 21 percentage points. In contrast, those teachers in more advantaged schools seem to use the award as a quality signal to stay or move to relatively high-achieving schools. While the program accomplished its goal of retaining high-performing teachers already working at disadvantaged schools, it did not achieve the objective of attracting better teachers from more advantaged schools.