Who Chooses Incentivized Pay Structures? Exploring the Link Between Performance and Preferences for Compensation Reform in the Teacher Labor Market

We report on research examining the revealed preferences of teachers in Denver Public Schools who were given the opportunity to select between remaining on a traditional salary schedule and opting into one of the nation’s high-profile pay reform systems, Denver’s Professional Compensation System for Teachers. The incentive structure creates differential earnings risk for teachers according to their experience and measured effectiveness as well as their staffing assignment and school. We find that teachers are generally responsive to the eligibility criteria, but many teachers who would have earned more under the new system chose not to participate.