Effective Teacher Retention Bonuses: Evidence From Tennessee

We report findings from a quasi-experimental evaluation of the recently implemented US$5,000 retention bonus program for effective teachers in Tennessee's Priority Schools. We estimate the impact of the program on teacher retention using a fuzzy regression discontinuity design by exploiting a discontinuity in the probability of treatment conditional on the composite teacher effectiveness rating that assigns bonus eligibility. Point estimates for the main effect of the bonus are not different from zero. However, for teachers of tested subjects and grades, the program has a consistently positive effect that is both statistically and substantively significant. We hypothesize that the null finding for the main effect is driven by teachers of untested subjects and grades given the amount of weight Tennessee's teacher evaluation system attributes to school-level performance. This creates a strong incentive to exit the Priority Schools that are by definition low performing. Implementation concerns, including the timing of application process and observed noncompliance in bonus distribution, present obstacles for both the program's effectiveness and its evaluation.