school scores in 2013 and 2014. Of the schools which received the performance award in 2015 around 62 percent (75 percent) of primary (junior secondary) schools were already ranked in the top 25 percent prior to the program (Table 3). This suggests that the strength of the incentive that the performance component provided differed across schools depending on their level of past performance.

# **4. Data, research questions and empirical strategy**

# **_Data_**

Using administrative data provided by the Jakarta government from 2012 to 2016, the paper examines whether the introduction of a performance component in the Jakarta school grant during the 2014/15 school year affected the level and distribution of learning outcomes in 2015 and 2016.

Student results on the annual Indonesian National Examination (UN - _Ujian Nasional_ ) are used as the main indicator to assess the impact of the performance grant. The UN is a mandatory standardized test in Indonesian ( _Bahasa Indonesia)_ , English, mathematics and science for government and non-government school students in the last year of primary, junior secondary and senior secondary school. Students across Indonesia take the same examination except in primary schools where provinces have set their own assessments since 2014. While the test development follows international standards, UN results are not comparable over time and primary examination results are only comparable among schools in the same province. Cheating in the national examinations remains a problem despite significant efforts by the authorities to introduce measures (e.g. different test papers, computerizing test taking) to reduce opportunities for cheating. Media reports of cheating are common but they do not show any clear pattern in the frequency of cheating between different types of schools. For example, the answer key for the junior secondary examination in 2015 was reported as being available to buy for between IDR 14 and IDR 21 million (US$ 1,000 – 1,500) in East Java (Tarigan 2015). A comparison of UN scores and scores from an independently administered test where cheating was less likely show a positive and statistically significant correlation (De Ree 2012). However, the integrity of the overall examination process warrants a cautious interpretation of the results of the current paper.

Data on school-level characteristics were also collected from national and provincial education management information systems. These data contained information on the number of teachers, their levels of education and experience, the employment status of teachers, classroom availability and condition. These variables are used to control for the impact of other factors that might have influenced changes in UN scores but were not associated with the school grant program.

# **_Research questions_**

The analysis seeks to answer three research questions:

1. **What impact did the introduction of the performance grant have on student learning in all eligible schools?** The paper first assesses the impact that the performance component had on the UN scores of eligible schools. It is expected that all government schools eligible for the program would have tried to improve their UN scores in an effort to receive the award.

2. **Was the impact of the program different for high and low performing schools?** Table 3 shows that the effort that schools needed to exert to get the performance grant differed 9