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Impact of Monetary Incentives on Teacher Decisions to Leave and Choose Schools: Evidence from a Policy Reform in Sao Paulo

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  • Elacqua, Gregory
  • Rodrigues, Mateus
  • Rosa, Leonardo

Abstract

Teacher turnover is a major challenge for human resource management in schools, adversely affecting student learning. We examine the impact of a monetary incentive program introduced in 2022 in the city of Sao Paulo, Brazil, which aims to reduce teacher turnover by allocating wage premiums ranging from 5% to 25% of base salary based on schools turnover levels. Our results show a significant reduction in turnover: an average decrease of 18% across all schools, with an even more pronounced 30% reduction in schools offering higher incentives. Notably, the program also attracted new teachers to these higher-incentive schools. An analysis of teacher preferences similarly reveals a shift towards schools offering greater wage premiums. Furthermore, we find that schools offering high incentives experienced significant improvements in student test scores, with gains of 0.3-0.6 standard deviations in standardized assessments. The findings demonstrate the effectiveness of monetary incentives in mitigating teacher turnover and improving educational outcomes, providing evidence-based guidance for policymakers developing teacher retention strategies.

Suggested Citation

  • Elacqua, Gregory & Rodrigues, Mateus & Rosa, Leonardo, 2025. "Impact of Monetary Incentives on Teacher Decisions to Leave and Choose Schools: Evidence from a Policy Reform in Sao Paulo," IDB Publications (Working Papers) 13950, Inter-American Development Bank.
  • Handle: RePEc:idb:brikps:13950
    DOI: http://dx.doi.org/10.18235/0013366
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    More about this item

    Keywords

    Teachers; financial incentives; teacher shortage; Teacher sorting; turnover rates; disadvantaged schools;
    All these keywords.

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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