The paper ‘Double for Nothing? Experimental Evidence on an Unconditional Teacher Salary Increase in Indonesia ’ by fellow Menno Pradhan (University of Amsterdam and VU Amsterdam), and co-authors Joppe de Ree, Karthik Muralidharan, and Halsey Rogers has been published in The Quarterly Journal of Economics. Read full paper here.
How does a large unconditional increase in salary affect the performance of incumbent employees in the public sector? We present experimental evidence on this question in the context of a policy change in Indonesia that led to a permanent doubling of teacher base salaries. Using a large-scale randomized experiment across a representative sample of Indonesian schools that accelerated this pay increase for teachers in treated schools, we find 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, and we can rule out even modest positive impacts on test scores. Our 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.
Article Citation: Joppe de Ree, Karthik Muralidharan, Menno Pradhan, Halsey Rogers, Double for Nothing? Experimental Evidence on an Unconditional Teacher Salary Increase in Indonesia, The Quarterly Journal of Economics, Volume 133, Issue 2, 1 May 2018, 993–1039. doi.org/10.1093/qje/qjx040