High-performing schools deserve to be get additional funding because they drive up standards across the board, claims a research document unveiled this month.
A paper presented by an American academic at the Economic History Society's recent annual conference in Durham revealed that poorly performing English counties improved their exam results under a funding system known as "payment by results".
However, proponents of performance-related pay in education should be wary of using these arguments to lobby a potential Tory education minister - the survey sample is nearly 150 years old.
Payment by results was introduced in 1863, establishing a public finance system in which national funding for individual schools depended in part on the outcomes of student exams conducted by school inspectors.
At its height, the system dictated that roughly half of the national funding a school received depended on exam outcomes. It was abandoned in 1890, in part because of the large amounts of paperwork involved.
David Mitch, professor of economics at the University of Maryland in the US, said that within a few years of being introduced, discrepancies in county performance across the core subjects of reading, writing and arithmetic narrowed.
In his paper, Did High Stakes Testing Policies Improve School Performance in the Most Educationally Disadvantaged Regions of Victorian England?, Professor Mitch said gaps between high and low-performing schools narrowed significantly between 1879 and 1890 - with reading skills showing the greatest change.
He said the funding system, which was introduced in a bid to ensure that central government got value for money after the explosion in school numbers during the 1850s, was deeply unpopular with teachers and led to increased unionisation of teachers.
"It kept school managers on their toes and teachers would be sacked if the managers thought it (bad exam performance) was costing them (denying them extra funding). As a result, teachers became more unionised," he said.
Professor Mitch, who based his report on data supplied to contemporary British parliamentary inquiries, said increasing amounts of red tape helped scupper the policy.
He added: "It became administratively very costly and there was lots of paperwork. School managers were getting bogged down."
In February, the controversy surrounding funding and pay was brought up to date when official figures revealed that tens of thousands of teachers were ruling themselves out of performance-related pay rises worth thousands of pounds.
Teachers' unions condemned the findings, saying that teachers could be put off applying for the cash by headteachers' budgetary worries.