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Monetary Incentives and Student Achievement in a Depressed Labor Market: Results from a Randomized Experiment

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  • Maria De Paola
  • Vincenzo Scoppa
  • Rosanna Nisticò

Abstract

We evaluate the effectiveness of monetary incentives in enhancing student performance using a randomized experiment involving undergraduate students enrolled at a southern Italian University. Students were assigned to three different groups: a high-reward group, a low-reward group, and a control group. Rewards were given to the 30 best-performing students in each group. Financial rewards increase student performance. High-ability students react strongly whereas the effect is null for low-ability students. Large and small rewards produce very similar effects. These effects also persist in subsequent years, when the financial incentives are no longer in place. No types of crowding-out effects of the monetary incentives are found.

Suggested Citation

  • Maria De Paola & Vincenzo Scoppa & Rosanna Nisticò, 2012. "Monetary Incentives and Student Achievement in a Depressed Labor Market: Results from a Randomized Experiment," Journal of Human Capital, University of Chicago Press, vol. 6(1), pages 56-85.
    • Handle: RePEc:ucp:jhucap:doi:10.1086/664795
    DOI: 10.1086/664795
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    Cited by:

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    3. Islam,Asad & Kwon,Sungoh & Masood,Eema & Prakash,Nishith & Sabarwal,Shwetlena & Saraswat,Deepak, 2020. "When Goal-Setting Forges Ahead but Stops Short," Policy Research Working Paper Series 9406, The World Bank.
    4. Joshua Angrist & Philip Oreopoulos & Tyler Williams, 2014. "When Opportunity Knocks, Who Answers?: New Evidence on College Achievement Awards," Journal of Human Resources, University of Wisconsin Press, vol. 49(3), pages 572-610.
    5. Emmanuel Dechenaux & Dan Kovenock & Roman Sheremeta, 2015. "A survey of experimental research on contests, all-pay auctions and tournaments," Experimental Economics, Springer;Economic Science Association, vol. 18(4), pages 609-669, December.
    6. V. Rattini, 2014. "The Causal Effect of Scholarships Targeted at Low Income Students on Performance: Evidence from Italy," Working Papers wp968, Dipartimento Scienze Economiche, Universita' di Bologna.
    7. Herranz-Zarzoso, Noemí & Sabater-Grande, Gerardo, 2018. "Monetary incentives and self-chosen goals in academic performance: An experimental study," International Review of Economics Education, Elsevier, vol. 27(C), pages 34-44.
    8. Damgaard, Mette Trier & Nielsen, Helena Skyt, 2018. "Nudging in education," Economics of Education Review, Elsevier, vol. 64(C), pages 313-342.
    9. Berry, James & Kim, Hyuncheol Bryant & Son, Hyuk Harry, 2022. "When student incentives do not work: Evidence from a field experiment in Malawi," Journal of Development Economics, Elsevier, vol. 158(C).
    10. Åslund, Olof & Engdahl, Mattias, 2018. "The value of earning for learning: Performance bonuses in immigrant language training," Economics of Education Review, Elsevier, vol. 62(C), pages 192-204.
    11. Bigoni Maria & Fort Margherita & Nardotto Mattia & Reggiani Tommaso G., 2015. "Cooperation or Competition? A Field Experiment on Non-monetary Learning Incentives," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 15(4), pages 1753-1792, October.
    12. Lisa Barrow & Cecilia Elena Rouse & Amanda McFarland, 2020. "Who Has the Time? Community College Students’ Time-Use Response to Financial Incentives," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 48(1), pages 35-52, March.
    13. Steven D. Levitt & John A. List & Sally Sadoff, 2016. "The Effect of Performance-Based Incentives on Educational Achievement: Evidence from a Randomized Experiment," NBER Working Papers 22107, National Bureau of Economic Research, Inc.
    14. Sacha Kapoor & Matthijs Oosterveen & Dinand Webbink, 2021. "The price of forced attendance," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 36(2), pages 209-227, March.
    15. Gianluca Argentin & Aline Pennisi & Daniele Vidoni & Giovanni Abbiati & Andrea Caputo, 2014. "Trying to Raise (Low) Math Achievement and to Promote (Rigorous) Policy Evaluation in Italy: Evidence From a Large-Scale Randomized Trial," Evaluation Review, , vol. 38(2), pages 99-132, April.
    16. Maria Paola & Vincenzo Scoppa, 2014. "The effectiveness of remedial courses in Italy: a fuzzy regression discontinuity design," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(2), pages 365-386, April.
    17. De Paola, Maria & Gioia, Francesca & Scoppa, Vincenzo, 2018. "The adverse consequences of tournaments: Evidence from a field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 151(C), pages 1-18.
    18. Loris Vergolini & Nadir Zanini & Nicola Bazoli, 2014. "Liquidity Constraints and University Participation in Times of Recession. Evidence from a Small-scale Programme," FBK-IRVAPP Working Papers 2014-11, Research Institute for the Evaluation of Public Policies (IRVAPP), Bruno Kessler Foundation.
    19. Gong, Jie & Liu, Tracy Xiao & Tang, Jie, 2021. "How monetary incentives improve outcomes in MOOCs: Evidence from a field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 190(C), pages 905-921.
    20. Florian Englmaier & Stefan Grimm & Dominik Grothe & David Schindler & Simeon Schudy, 2021. "The Efficacy of Tournaments for Non-Routine Team Tasks," CESifo Working Paper Series 9189, CESifo.
    21. Adam M. Lavecchia & Heidi Liu & Philip Oreopoulos, 2014. "Behavioral Economics of Education: Progress and Possibilities," NBER Working Papers 20609, National Bureau of Economic Research, Inc.
    22. Maria De Paola & Francesca Gioia & Vincenzo Scoppa, 2022. "Online Teaching, Procrastination And Students’ Achievement: Evidence From Covid-19 Induced Remote Learning," Working Papers 202202, Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF.
    23. Sandner, Malte, 2013. "Quasi-Experimental Evaluation of a Student Mentoring Program," Hannover Economic Papers (HEP) dp-512, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    24. Brunello, Giorgio & De Paola, Maria, 2013. "The Costs of Early School Leaving in Europe," IZA Discussion Papers 7791, Institute of Labor Economics (IZA).
    25. Brade, Raphael & Himmler, Oliver & Jäckle, Robert, 2018. "Normatively Framed Relative Performance Feedback – Field Experiment and Replication," MPRA Paper 88830, University Library of Munich, Germany.

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    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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