Motivated by the powerful relationship between schooling and earnings, policy makers have implemented a range of interventions designed to increase the schooling of disadvantaged children. Most of these interventions provide remedial or other support services. The economic view of education, which sees schooling as a form of investment, suggests strategies that increase the monetary incentives for pupils to study and teachers to teach may also be fruitful. The potential for economic incentives to increase attainment and achievement motivates our projects. The first project focuses on an important education milestone for Israeli high school students, success on national high school matriculation examinations. These tests are similar to the New York Regents Exam, the French Baccalaureate Test, and the recently implemented Massachusetts Comprehensive Assessment System. The Israeli setting provides a unique opportunity to analyze an experimental program designed to increase matriculation rates among disadvantaged pupils. The Achievement Awards program offered substantial cash awards to pupils who succeeded on their exams. An innovative feature of our study, besides focusing on monetary incentives, is the analysis of data from randomly assigned treatment and control groups. Moreover, because 10th and 11th graders were offered awards for staying in school, we can use the same program to look at the effect of monetary incentives on dropout rates. A second component of our study looks at a randomized trial that offered teachers' awards based on their students' dropout rates. A unique feature of this part of the study is the combination of randomized teacher incentives with an observational study of student incentives. The interaction of student and teacher incentives can be assessed using a regression-discontinuity design. The results of this study will shed light on students' and teachers' responses to incentives and on the constraints faced by low-income schoolchildren. The proposal also outlines an agenda for the exploration of methodological issues related to the design and analysis of group-randomized trials in an education setting. ? ?
