Contract grading has been shown to reduce stress and anxiety, promote self-directed learning, and disrupt unjust educational norms (Cowan, 2020; Inoue, 2019; Medina & Walker, 2018). Yet, there is growing recognition of challenges associated with the approach, including the unintended effects of deemphasizing grades (Inman & Powell, 2018) and the possibility that labor-based contracts, in particular, may put some students at a disadvantage (Carillo, 2021). This article reports selected findings from an IRB-approved multi-semester, comparative study of labor-based and labor-informed contract grading in first-year writing courses at a large private research university. The study affirms several findings from existing research on contract grading. In particular, it shows the approach mitigates students’ stress and anxiety and increases their overall satisfaction with grading. Contract grading shifts the assessment ecology of the first-year writing classroom so that the challenges and rewards of writing take priority over the pressures and limitations of grades (see Inoue, 2015). Drawing on the literature of self-efficacy (Bandura, 1977, 1994, 1997; Pajares, 2003), the authors theorize that contract grading encourages students to develop an efficacious writerly habitus grounded in self-motivated effort, increased confidence, and heightened understanding of writing as a mode of thinking. 
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