Daniel Pink's Drive: The Surprising Truth About What Motivates Us argues that incentives like money and recognition may lead to short-term motivation, but the carrot-and-stick approach doesn’t lead to long-term motivation.  The end of the book offers some specific advice for different audiences, including these tips for parents about the most effective ways to praise kids.

Praise effort and strategy, not intelligence. 
Students who are praised for being smart may avoid challenges and choose easier paths.  Kids who are praised for their effort are more willing to take on new and difficult tasks.

Make praise specific.
Instead of heaping generalities on kids, parents should give them useful information and tell them specifically want they’ve done that’s noteworthy.

Praise in private
Pink says that praise should be feedback, not an awards ceremony.  That’s why praise is often best delivered in private.

Offer up praise only when there’s a good reason for it.
Kids can see through fake praise.  Kids see it as dishonest and unearned.  Be sincere, or be quiet. 

Here’s Pink’s Ted talk discussing his ideas about the science behind motivation.