Description:
<jats:title>Abstract</jats:title><jats:p>This paper studies the effect of unconditional teacher salary increases on teacher and student outcomes. To study the issue, we evaluate the rural hardship allowance in Zambia, which corresponds to a salary increase of 20%. This allowance is allocated to schools on the basis of a distance criterion allowing us to use a regression discontinuity design. We use administrative data from 2004 to 2015 on school, teacher characteristics and test scores. The administrative data are complemented with a telephone survey of schools close to the eligibility threshold. We find that crossing the threshold increases the share of teachers obtaining the allowance by 40%. Because of some non‐compliance with the allocation rule, our estimates are fairly imprecise. Focusing on provinces with better compliance we find some, albeit weak, evidence that the allowance increases the stock of teachers. We, however, find no effects on teacher characteristics or on student test scores.</jats:p>