Although Brexit and Megxit may be dominating headlines, politics and the royal family aren't the only issues worth reading up on from across the pond. New research on teacher compensation structures from the IZA Institute of Labor Economics found that schools were able to more efficiently allocate resources and that student learning increased when they used performance-based pay--instead of national pay scales.
First, a bit of context. Historically, England's teachers have been paid under a national pay scale looking much like most American school systems, but that all changed in 2013 when the government required schools to implement performance-based pay. Notably, schools could decide their own the definition of "performance." Rather than invent something new, most schools turned to their existing evaluation systems, which included measures familiar to the U.S., such as ratings from classroom observations, growth in student learning, and measures linked to the school improvement plan.
What happened? Teacher pay changed quite a bit, particularly in locations with a lot of competition for teachers. Schools in tighter labor markets grew their teacher salaries more quickly, increasing retention, and even improving student test scores. The largest such benefits were seen in schools with more disadvantaged student populations.
One problem did emerge. Consistent with prior research on this subject, the researchers also found that removing pay scales led to higher pay growth for both male teachers and teachers with longer tenures in a school, albeit only slightly. Although the researchers could not determine whether these differences were related to bias and/or nepotism, they concluded that the differences would not have happened under the old system. That need not be a deal breaker, however, as unintended differentiation along those lines could be quickly mitigated by regular data analysis and holding school leaders accountable.