Managing teachers in low-income countries

Apart from the introduction (Chapter 1) and conclusion (Chapter 7), this thesis comprises five chapters organized into two parts:
Part I studies promotion incentives in the public sector, and focuses on the case of teachers in rural China. All teachers in China compete with their colleagues for rank promotions. I aim to answer two questions: first, whether the promotion system for teachers in China elicits effort from teachers, and second, how the design features of the promotion system affect effort incentives. Part I includes four chapters. Chapter 2 introduces the topic and provides a background on promotions for teachers in China. It also discusses related work in this area, and introduces the data that will be used in Part I.
Chapter 3 presents and tests a theoretical model of promotions as an incentive device. The model treats all teachers as identical in terms of their ability, and as such, focuses on average levels of teacher effort. It predicts that effort is exerted in response to potential promotions. In addition, the model also predicts that average effort incentives are higher in promotion contests in which the wage gap is higher, the promotion rate is closer to one half, the number of teachers competing for a promotion is higher (for promotion rates between 1/3 and 2/3), and the average age of teachers in the contest is lower, or the proportion of female teachers is lower. The model is used to derive an estimating equation by which to test predictions on average levels of teacher effort. An equation is estimated for the probability of promotion as a function of teacher effort, which is proxied by the teachers' annual performance evaluation scores. There is simultaneity present as effort increases the probability of promotion, but it is also the promise of promotion that motivates effort. As a result, effort is instrumented using wage changes, which are both informative (higher wage gaps are associated with higher effort) and valid (wages only affect promotions through effort). The second stage of the regression demonstrates that effort is indeed exerted by teachers in order to win promotions. The first stage confirms the predictions of the model with regards to wage gaps, the promotion rate, and the size and composition of the pool of competitors.
Chapter 4 extends the model of Chapter 3 in two ways: teachers are now treated as heterogeneous in ability, and a multi-period model of teacher effort over time is also added. This chapter focuses on individual levels of teacher effort, and on how the parameters of the promotion system interact with teacher characteristics to affect teacher effort. The predictions include that teachers in the extremes of the skill distribution will have lower incentives, and as the contest size increases these teachers will have effort incentives that are lower still, that teachers who are five or more years from promotion eligibility will have zero effort, as will teachers in the highest rank, that teacher effort will increase in the five years leading up to promotion eligibility, and that teacher effort will decrease after a teacher is eligible for promotion but has been passed over several times. An effort equation is estimated that captures all of these components, and the predictions are largely affirmed by the data. Tests are conducted in order to alleviate concerns about selection, as well as measurement error in the performance evaluation scores. Chapter 5 concludes Part I.
Part II of this thesis looks at teacher labour markets, social distance, and learning outcomes in Punjab, Pakistan. Chapter 6 explores the link between the distribution of teachers in the labour market, caste differences between teachers and students, and child learning outcomes. Using rich longitudinal data from Pakistan that allows me to convincingly identify the causal effects of caste on learning outcomes, I show how the distribution of teachers across public schools induces particular matches of high and low caste teachers and students, and that these matches are highly predictive of test score outcomes. Specifically, low caste male children perform significantly better when taught by high caste teachers than when they are taught by low caste teachers. Several possible channels are explored, including discrimination in the classroom, role model effects, teacher quality, patronage, peer effects, and returns to education. Although the channel cannot be proven, the data points to high caste teachers being able to raise the already high returns to education for low caste children because they are able to assist these children in getting educational benefits and employment later on using their patronage networks. Low caste children therefore work harder to impress high caste teachers, and this results in higher learning outcomes.

Keywords: education
caste
social distance
China
teachers
Pakistan
promotions
Incentives
Advisor: Dercon, S