Double for Nothing? : Experimental Evidence on an Unconditional Teacher Salary Increase in Indonesia
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...
| Main Authors: | , , , |
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| Language: | English |
| Published: |
World Bank, Washington, DC
2017
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/616961512396126770/Double-for-nothing-experimental-evidence-on-an-unconditional-teacher-salary-increase-in-Indonesia http://hdl.handle.net/10986/28987 |
| Summary: | 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. |
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