Does performance-based pay improve teaching?

Abstract

PISA has long established that high-performing education systems tend to pay their teachers more. They also often prioritise the quality of teaching over other choices, including class size. But in the current budgetary climate, paying everybody more may not be a viable alternative. So many countries are now targeting salary increases to schools with particular needs or short supplies of teachers, or have developed greater local flexibility in salary schemes. Some countries have responded with systems of individual pay. But is recognising and rewarding teaching performance through pay an effective way to leverage improvement?