This paper examines the effort incentives of teachers in rural China. China employs a complex system of annual evaluations and promotions for civil servants in which good evaluations, along with a teacher's years of service and education, make teachers eligible to apply for rank promotions. A model of promotions is developed in which agents are both incentivized, and are sorted into ranks by ability. The model's predictions are then tested using panel data on teachers collected as part of the Gansu Survey of Children and Families (GSCF). It was found that teachers respond to promotion incentives as predicted by the model: salary differentials are used to motivate teachers to work harder and teachers do work hard for promotions; teachers that are repeatedly passed over for promotions tend to slack off, as do teachers that have been doing well in the past; increased competition in the form of more teachers increases incentives when the probability of promotion is between 1/3 and 2/3; and effort is low when the probability of promotion is close to zero or one.
Promotion incentives and teacher effort in China.