Do teacher incentives actually make our schools better? New research on North Carolina schools by Thomas Ahn of the University of Kentucky suggests that the answer is a definitive "yes." At this AEI event, Ahn and Jacob Vigdor of Duke University will discuss their findings that a properly designed bonus program sidesteps all the major criticisms of K–12 teacher incentives. North Carolina rewards teachers based on schoolwide performance, and Ahn found that this system works better than individual-level incentives. The state's schoolwide pay-for-performance system did not create a "free rider" problem, as critics suggested, but increased both teacher effort and student achievement. Duncan Chaplin of Mathematica Policy Research and Jack Dale of Fairfax County (Virginia) Public Schools will respond.