Several studies from the context of American school reform also document the role of unintended side effects of explicit accountability programs. Large-scale testing of students as part of the 2001 No Child Left Behind Act ties student test scores to important resource allocations for schools, giving schools incentives to improve student learning, but also to increase pure test-taking ability or to engage in outright cheating (Jacob and Levitt 2003; Jacob 2005). Quite surprisingly, (Figlio and Winicki 2005), using daily lunch menu data from a random sample of 23 school districts in Virginia, show that even the caloric content of school lunches was adjusted upwardly to improve cognitive ability on test days.

An interesting study of private schools in India assesses the role of teacher unionization on student outcomes (Kingdon and Teal 2008). While not explicitly evaluating performance pay, unionization of teachers represents an increase in job security and uniform, higher pay, without being linked to explicit performance standards. (Kingdon and Teal 2008) find strong negative effects of unionization on student outcomes, utilizing a within-pupil across subject variation fixed effects design. The study by (Ladd 1999), mentioned above, on school accountability in Dallas, uses panel data and finds positive effects of merit pay on student performance and dropout rates.

A set of observational studies (Lavy 2008, 2009) uses data from an Israeli policy experiment with tournament based teacher competition for bonuses. Using regression discontinuity and difference-indifference designs to approximate random treatment assignment, the study shows significant gains in student achievements. The studies also assess potential mechanisms for the link between performance pay and improved test scores, identifying a change in teaching methods, enhanced after-school teaching and increased teacher responsiveness over test-score manipulation as important causal channels.

A comprehensive study using cross-national data on performance systems in schools and PISA test scores also finds an positive association between pay-for-performance type reforms, improved teacher quality and student test scores (Woessman 2010).

# **Health care jobs**

A fairly large literature has dealt with the role of performance pay in improving health care delivery and services. General literature reviews (Petersen, D., et al. 2006; C. and N 2009) reflect the diversity in empirical approaches and the strong focus on OECD country experiences. In particular performance incentives in the UK NHS system and several U.S. insurance systems have received attention in the research literature.

A series of studies has evaluated the potential effects of financial incentives for primary care physicians. The British NHS introduced performance-pay elements into the remuneration of family practitioners in 2004. (Doran, Fullwood, et al. 2006) use data on over 8000 family practices and evaluate the effect of performance pay on patient outcomes and find overall high performance in the first year of the incentive scheme, but also evidence of ``gaming‘‘ through the exclusion of patients. (Campbell, Roland, et al. 2005; Campbell, Reeves, et al. 2007) also analyze the role of financial incentives in a stratified random sample of British general practices focusing on care for coronary heart disease, asthma and type 2 diabetes, finding a substantial effect of financial incentives introduced in 2004. (Steel, Maisey, et al. 2007) find positive effects on asthma and hypertension treatment, as do (Vaghela, Ashworth, et al. 2009).

(Chalkley, Tilley, et al. 2010), using evidence derived from a natural experiment in the UK publicly funded dental care system, analyzed the effects of using incentive pay that provided explicit rewards for increased service provision against the alternative of offering an employment-like relationship. They found that dentists who were moved from quasi-employment arrangement to an activity-based incentive contract increased their activity in the publicly funded service by 26%. They also found evidence of 17