DP11704 Promotion Incentives in the Public Sector: Evidence from Chinese Schools

Author(s): Naureen Karachiwalla, Albert Park
Publication Date: December 2016
Keyword(s): China, incentives, promotions, teachers
JEL(s): J31, J33, J45, M51
Programme Areas: Labour Economics, Development Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=11704

We provide evidence that promotion incentives influence the effort of public employees by studying China's system of promotions for teachers. Predictions from a tournament model of promotion are tested using retrospective panel data on primary and middle school teachers. Consistent with theory, promotions are associated with wage increases, higher wage increases are associated with better performance, and teachers increase effort in years leading up to promotion eligibility but reduce effort if they are repeatedly passed over for promotion. Evaluation scores are positively associated with teacher time use and with student test scores, diminishing concerns that evaluations are manipulated.