Derek Neal’s current research focuses on the design of incentive systems for educators. His work explores the design flaws in current performance pay and accountability systems and also highlights the advantages of providing incentives through contests between schools. In recent years, he also has focused his research efforts on racial inequality in the United States and on the design of education policy. From 2005-09, he directed the Chicago Workshop on Black–White Inequality. This workshop involved a series of one-day conferences that explored various aspects of black–white inequality in the United States. The workshop began as a response to his Handbook of Economics of Education chapter entitled, “Why Has Black–White Skill Convergence Stopped?” which carefully documented the stagnation of Black relative progress with respect to human capital beginning in the late 1980s.
He is a past president of the Midwest Economics Association, a fellow of the Society of Labor Economists, and an editor of the Journal of Political Economy.