No evidence anywhere shows that merit-pay systems, aimed at individual teachers, improve education. Incentives to groups of teachers are effective, but not individuals.
In education "merit pay" means that a school or district decides what "merit" means -- usually certain gains in test scores -- and dangles financial bonuses to entice individual teachers to work harder.
Intuitively, it sounds like it could work.
But in a 1998 Harvard Business Review, Jeffrey Pfeffer wrote an excellent essay called "Six dangerous myths about pay." He blames economic theory for creating the myth "that individual incentive pay drives creativity and productivity, and that people are primarily motivated by money.... Despite the evident popularity of this practice, the problems with individual merit pay are numerous and well documented. It has been shown to undermine teamwork, encourage employees to focus on the short term, and lead people to link compensation to political skills and ingratiating personalities rather than to performance."
He's talking about the private sector, so imagine the boondoggle it becomes in the public sector.
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