Teacher compensation schemes are often criticized for lacking a performance-based component. Proponents argue that teacher incentive pay can raise student achievement and stimulate system-wide innovation. We examine a group-based teacher incentive scheme implemented in New York City and investigate whether specific features of the program contributed to its ineffectiveness. Although overall the program had little effect on student achievement, we show that in schools where incentives to free ride were weakest, the program led to small increases in math achievement. Our results underscore the importance of carefully considering the design of teacher incentive pay programs.

Growing reliance on student loans and repayment difficulties have raised concerns of a student debt crisis in the United States, but little is known about the effects of student borrowing on human capital and long-run financial well-being. We use variation induced by recent expansions in federal loan limits combined with administrative data-sets to identify the effects of increased access to student loans on credit-constrained students’ educational attainment, earnings, debt, and loan repayment. Increased student loan availability raises student debt and improves degree completion, later-life earnings, and student loan repayment, while having no effect on homeownership or other types of debt.