Far-reaching changes in the governance structure have – supported by recent research in the economics of education – significantly increased the importance of institutions in the school sector. This includes the implementation of material incentive programs. Recently such programs have been extended to students. The article gives an outline of their theoretical basis and presents first empirical results from evaluations of various programs in Anglo-Saxon countries. They provide a mixed picture: Whereas input-oriented incentive programs frequently were successful in attaining intended behavioural modifications, available evidence for output-oriented programs suggests a more cautious judgement of their potential to enhance student achievement.

Keywords
economics of education, institutions, material incentives for students, extrinsic motivation