Incentives and Teacher Effort : Further Evidence from a Developing Country

Few would contest that teachers are a very important determinant of whether students learn in school. Yet, in the face of compelling evidence that many students are not learning what they are expected to learn, how to improve teacher performance has been the focus of much policy debate in rich and poor countries. This paper examines how incentives, both pecuniary and non-pecuniary, influence teacher effort. Using school survey data from Lao PDR, it estimates new measures of teacher effort, including the number of hours that teachers spend preparing for classes and teacher provision of private tutoring classes outside class hours. The estimation results indicate that teachers increase effort in response to non-pecuniary incentives, such as greater teacher autonomy over teaching materials, and monitoring mechanism, such as the existence of an active parent-teacher association and the ability of school principals to dismiss teachers. Methodologically, the paper provides a detailed derivation of a simultaneous ordinary least squares-probit model with school random effects that can jointly estimate teacher work hours and tutoring provision.