Principal Incentives and Student Success: Evaluating Pay-for-Performance Policies
School principals play a pivotal role managing teachers and students. Yet, unlike managers in the private sector, principal salary is typically tied to education and experience rather than measures of school performance. This paper studies the effects of a principal incentive pay that was introduced in North Carolina public schools in 2017 on principal effort, teacher effectiveness (measured by value-added) and student test scores. First, we use latent factor analysis applied to principal self-report data on hours worked as well as teacher reports about school leadership.