Using a Difference-in-Differences Approach to Estimate the Effects of Teacher Merit Pay on Student Performance

Abstract

The present study uses a difference-in-differences approach to estimate the effects of teacher merit pay on student graduation rates and dropout rates. Using district-level data from the Schools and Staffing Survey for the years 1999–2000, 2004–2005, and 2007–2008, results of the present study suggest that merit pay for excellence in teaching has statistically significant and positive effects on the district-level graduation rate, but no significant effect on dropout rates. Merit pay for national teacher certification, however, had no effects on either dropout rates or graduation rates.