Hiring The Best Teachers Is Difficult - Is Higher Pay The Answer?

Takeaway: Paying generous bonuses to top-rated educators in low-performing public schools dramatically raises student achievement and, those gains disappear if the financial incentives are removed.

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Key Points

• Dramatic Learning Gains: Offering annual stipends of $6,000 to $10,000 to highly effective teachers nearly eliminated the math and reading achievement gap between Dallas’s lowest-performing elementary schools and the district average.

• Persistent Benefits: Students exposed to effective teachers under the program for multiple years maintained higher math achievement when they transitioned into middle school.

• Incentives Are Essential: When financial stipends were later eliminated at improved schools, highly rated teachers departed in large numbers and student test scores fell back sharply.

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Why do some public schools persistently struggle while others thrive? One of the biggest challenges in education policy is that high-poverty, low-achieving schools routinely struggle to attract and retain effective teachers.

Traditional public school salary schedules pay teachers strictly based on years of experience and advanced degrees rather than instructional quality, leaving top educators with little financial reason to work in the most challenging school environments.

This setup creates a frustrating cycle: hard-to-staff schools face high turnover, rely disproportionately on novice teachers, and fall further behind. While policymakers have tried various school turnaround strategies over the decades, few have produced sustained success. The question remains: Can targeted financial incentives break this cycle?

What Did the Researchers Study?

Researchers Andrew Morgan, Minh Nguyen, Eric Hanushek, Ben Ost, and Steven Rivkin analyzed the Dallas Independent School District’s (DISD) Accelerating Campus Excellence (ACE) program, launched in 2016. Dallas built a multi-measure evaluation system that ranked teachers and principals using classroom observations, student surveys, and test-score growth.

When a school entered the ACE program, all existing staff had to reapply for their jobs, resulting in an 80% turnover rate in the first year. The district then offered annual stipends ranging from $6,000 to $10,000 for top-rated teachers (and $13,000 for principals) who were selected to work at these target schools.

Using administrative data from 2012 to 2019, the authors used a difference-in-differences design to compare ACE schools against a control group of similar low-performing Dallas elementary schools.

Findings

The impact of the program was immediate and substantial. In the first year of ACE implementation, math scores rose by approximately 0.5 standard deviations and reading scores increased by 0.25 to 0.35 standard deviations.

In practical terms, the intervention virtually closed the achievement gap between these historically low-performing campuses and the district average. Moreover, students who spent two or three years in an ACE elementary school retained meaningful math gains after moving into sixth grade.

The study also provides a rare look at what happens when performance stipends end. In 2019, Dallas scaled back the program at several original ACE campuses because student performance had improved so much that the schools were no longer classified as failing. Without the stipends, teacher turnover spiked to 44%.

Highly rated teachers left at the highest rates, with many moving directly to other schools that still offered ACE stipends. Consequently, student test scores dropped sharply back toward pre-program levels.

Limitations and Context

While these results are compelling, a few nuances matter.

First, ACE was a multifaceted initiative; alongside educator stipends, it added an extra hour to the school day and expanded after-school options. However, existing research on these non-personnel components suggests they account for less than a quarter of the total improvement.

Second, the evaluation relies on a small number of elementary schools within a single district that had already built a sophisticated educator rating system.

Why It Matters

If these findings are correct, they demonstrate that traditional public school systems can achieve rapid, transformational turnarounds in student learning by tying pay to effectiveness and offering significant financial compensation to work in high-poverty schools.

However, the study also delivers a critical lesson for policymakers: turnaround gains are not self-sustaining. Highly effective educators operate in a competitive labor market, and keeping them in challenging school environments requires permanent financial commitments.

Learn More

• Paper Title: Attracting and Retaining Highly Effective Educators in Hard-to-Staff Schools

• Authors: Andrew Morgan, Minh Nguyen, Eric Hanushek, Ben Ost, and Steven Rivkin

• Journal: American Economic Journal: Economic Policy

• Publication Year: 2026

• URL: https://www.aeaweb.org/articles?id=10.1257/pol.20240356

Section 7 - Econ Today Explains

Economic Concept: Compensating Differential

A compensating differential (or compensating wage differential) is additional pay offered to induce an employee to accept a job with undesirable or difficult working conditions. In labor markets, workers evaluate overall job satisfaction—including stress, workload, location, and environment—rather than cash compensation alone.

Because high-poverty schools often present greater instructional challenges and higher stress, school districts must offer a salary premium to attract and keep highly effective professionals who otherwise have appealing opportunities in less demanding schools.

This article was written by AI but reviewed by a real human.