We use a field experiment in Tanzania to compare the effectiveness on learning of two teacher performance pay systems. The first is a Pay for Percentile system (a rank-order tournament). The second rewards teachers based on multiple proficiency thresholds. Pay for Percentile can (under certain conditions) induce optimal effort among teachers, but…

Tying teachers' pay to their classroom performance should, says Victor Lavy, improve the current educational system both by clarifying teaching goals and by attracting and retaining the most productive teachers. But implementing pay for performance poses many practical challenges, because measuring individual teachers' performance is difficult.…