Research

Public employers often use exams to rank and select workers for permanent positions. In Peru, temporary teachers must pass a centralized exam to compete for permanent positions. This paper uses administrative data and a regression discontinuity design to study how passing the exam affects retention and output. Barely passing lowers the probability of leaving public teaching by 3.4 percentage points (29 percent) and retains more productive teachers among those with private-sector experience. For long-serving temporary teachers, the evidence points to job security as a channel: permanent employment lowers their exits by 4.4 percentage points. The exam also matters beyond permanent employment: schools hire passers they evaluated, raising temporary contracts at those schools by 1.1 to 3.4 percentage points. In grade 8, test scores are 0.05 and course grades 0.10 standard deviations higher with teachers who barely passed, with no evidence of learning losses.