In the context of teacher pay and management reforms and the position of the teacher labour market in the UK, Dolton, McIntosh and Chevalier examine international perspectives on performance-related pay for teachers. A brief history of teacher pay over the 1954-2000 period sets the scene, the case for the introduction of performance-related pay (PRP) for teachers is critically examined in terms of economic theory, and a number of issues are raised as to how suitable a tool PRP is for motivating teachers. Having explored possible ways of carrying out an appropriate econometric evaluation of PRP schemes, the review discusses evidence of such payment systems for other public sector professions in the UK, and for teachers in other countries.