improvement of student outcomes (Muralidharan and Sundararaman 2009). In the treatment group scores were higher by 0.28 standard deviations in math tests and by 0.16 standard deviations in language tests, across ―conceptual‖ and ―mechanical‖ parts of the test. They also find positive spill-over effects to subjects not part of the official student assessment.

# **Health sector**

A number of randomized-controlled trials have been implemented to determine the role of performance pay on health worker productivity, patient treatment and outcomes. Similar to studies on healthcare relying on observational data, the majority of studies assess these questions in the context of OECD health care systems. (Prentice, Burgess, et al. 2007) point out that improving quality rather than quantity of output is the primary focus for many, if not all, performance pay schemes implemented in the healthcare sector.

One of the first studies to employ an experimental design was work on performance incentives for nursing homes (Norton 1992). He finds that nursing homes assigned to the treatment group show better resident health outcomes and shorter stays.

(Kouides, Bennett, et al. 1998) implement a randomized-controlled trial, offering a randomly selected set of primary care physicians financial incentives based on influenza immunization rates of the elderly, as part of a Medicare demonstration project. Doctors in the treatment group were eligible to receive a $0.80 payment per shot for an immunization rate of 70% and $1.60 for each shot, if an immunization rate of 85% was attained. The experiment finds a difference of 7% in the immunization rate between treatment and control groups.

On the other hand, (Hillman, Ripley, et al. 1998; Hillman, Ripley, et al. 1999) use two RCT designs to incentivize cancer screenings for women of age 50 and above and pediatric immunizations, respectively. In both studies the authors document no significant difference between treatment and control groups. Similarly, a RCT implemented by (Grady, Lemkau, et al. 1997) finds no clear effects of financial incentives on mammography referrals by primary care physicians.

Contrastingly, a set of studies (Fairbrother, Hanson, et al. 1999; Fairbrother, Siegel, et al. 2001), also focusing on pediatric immunizations, finds that performance incentives increased immunizations rates by several percentage points compared to the control group. A randomized field trial at the clinic-level found that financial incentives improved treatment of smoking cessation outcomes (Roski et al. 2003). Work on performance pay for cognitive services interventions by pharmacists also finds positive effects (Christensen et al. 2000).

To our knowledge, the only two available randomized-controlled trials on performance pay in health care in a low income country are a study by Basinga et al. (2010) in Rwanda and a study by Singh (2010) in India. Basinga et al. use an RCT design to evaluate performance pay in Rwandan primary health care centers. The authors took advantage of a sequenced roll-out of the scheme across Rwandan health care facilities, collecting data on child preventive care and prenatal delivery. To isolate the performance-pay effect from a general increase in resources, comparison facilities received an equivalent increase in their budgets. The study uses information from 166 facilities and 2158 households. They find large effects on all central outcome measures, but with particularly striking effects for services with the highest payoffs and smallest necessary staff effort.

25