Can Financial Incentives Help Disadvantaged Schools to Attract and Retain High‐Performing Teachers? Evidence from Chile

Abstract Extensive sorting of high‐performing teachers into the most advantaged schools contributes to the wide socioeconomic achievement gaps in many countries. The Chilean Pedagogical Excellence Assignment (AEP) pays bonuses to high‐performing teachers that are larger if they work at a disadvantaged school. Using a sharp regression discontinuity based on the program's eligibility rules, we estimate how the award affects where high‐performing teachers choose to work. The bonus, equivalent to 16 percent of an average annual salary, increased retention of high‐performing teachers in disadvantaged schools by 17 to 21 percentage points. In contrast, those teachers in more advantaged schools seem to use the award as a quality signal to stay or move to relatively high‐achieving schools. While the program accomplished its goal of retaining high‐performing teachers already working at disadvantaged schools, it did not achieve the objective of attracting better teachers from more advantaged schools.