Georgia offers salary incentives for K-12 educators to obtain post-baccalaureate degrees, intending to improve student performance. In this paper, we evaluate the empirical relationship between advanced degrees earned by teachers and student pass rates on the state high school graduation test. More advanced degrees do not significantly improve pass rates. We conclude the devil is in the details. It is well known that educational performance is the product of the interaction of many factors, particularly family and socio-economic variables. Previous literature also draws only a weak relationship between teacher quality and salary incentives. Thus, Georgia's experience suggests it is difficult to design effective policy that depends on indirect incentives to perform. Certain policies may fail because they are ill-conceived, or because interest group pressures interfere in their planning or execution. But sometimes policies fail because there is simply a limit to government's ability to solve problems.
JEL Codes: 1220, 1280
Keywords: State education finance, Teacher pay, State education policy
In nearly any comparison of educational performance, Georgia regularly scores poorly relative to other states Publication of such findings is, as expected, followed by public officials announcing the need to improve public education in the state. State officials in Georgia had a promising idea: give K- 12 teachers a monetary incentive to increase their formal academic qualifications. The reasoning behind the policy is that better qualified teachers will produce higher quality educational services; teachers acquiring more formal education will enhance their ability to stimulate and motivate their students (e.g., Hanushek, 2005; Hanushek, Kain, O'Brien, and Rivkin, 2005). In turn, higher quality education should reveal itself as improved performance on common measures of educational outcomes, thereby addressing the perceived public policy concern. Despite Georgia's laudable adherence to a basic economics principle - people respond to incentives - we expect this policy will not make a noticeable impact on student achievement.
This study evaluates the relationship between advanced degrees for teachers and student performance on the Georgia High School Graduation Test (GHSGT). Using data over the period 1998 to 2002 for nearly all of Georgia's independent school districts, we model GHSGT pass rates as a function of educational, demographic, and socio-economic conditions.1 Our estimates indicate that GHSGT pass rates do not improve as more teachers earn more advanced degrees. According to the data examined in this paper, Georgia's policy is an expensive yet ineffective instrument for leaving no child behind.
This result may be unsurprising to some. The relationship between the formal qualifications of teachers and student achievement is too tenuous and too poorly understood. Although this policy is likely to be politically popular, for it to be effective, it must be true that (a) the state's incentives are sufficient for a significant number of teachers to improve their qualifications, (b) a teacher's professional effectiveness improves with a teacher's formal qualifications, and (c) the increase in teacher effectiveness is not inframarginal; it is large enough to overcome the effect of other influences on student achievement. In terms of influencing student achievement, salary incentives are, at best, indirect effects.
Nevertheless, our "non-result" highlights an important issue in determining and executing public policy. Georgia has acknowledged that people respond systematically to incentives, and has attempted to find a workable set of incentives to achieve a desired end. Georgia's government has attempted to borrow the mechanisms of the market to achieve a desired effect. Conventional economic thinking would assess this policy as "smart" and likely to …