This study evaluates the impacts of low-cost, performance-based incentives in Tanzanian secondary schools. Results from a two-phase randomized trial show that incentives for teachers led to modest average improvements in student achievement across different subjects. Further, withdrawing incentives did not lead to a “discouragement effect” (once incentives were withdrawn, student performance did not fall below pre-baseline levels). Rather, impacts on learning were sustained beyond the intervention period. However, these incentives may have exacerbated learning inequality within and across schools. Increases in learning were concentrated among initially better-performing schools and students. At the same time, learning outcomes may have decreased for schools and students that were lower performing at baseline. Finally, the study finds that incentivizing students without simultaneously incentivizing teachers did not produce observable learning gains.

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