Carrot and stick?: Impact of a low-stakes school accountability program on student achievement

•This study examines a school accountability program providing financial resources.•This study uses the regression discontinuity design for the causal inference.•The low-stake accountability program significantly improves student performance.

A key concern in the design of education policies relates to the structure of incentives in accountability systems. This paper examines a school accountability program that provides financial support to low-performing schools but has no direct punishment scheme for recipients who do not exhibit improvement. Although the program does not include high-stakes consequences, our estimates indicate that the program reduced the share of underperforming students by 18%. This paper's results suggest that to improve student achievement, a school accountability program does not need to set high-stakes consequences that potentially induce unwanted strategic behaviors on the part of school workers.