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The Quantity and Quality of Teachers: A Dynamic Trade-off

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  • Gregory Gilpin
  • Michael Kaganovich

Abstract

We study the dynamics of the quantity and quality of teachers in the framework of dynamic general equilibrium OLG model. The quantity and quality are jointly set by a government agency wishing to maximize the quality of basic education per student while being bound by teachers’ collective bargaining agreement which equalizes teacher pay. Our model features two stages of education: basic and advanced (college), the latter being required of teachers. The cost of hiring teachers is influenced by the outside opportunities that college educated individuals have in the production sector. We show that this factor strengthens in the process of endogenous growth and moreover that it pushes the optimal trade-off between quantity and quality of teachers in the direction of the former. Namely, the number of teachers hired will grow over time while their relative quality (but not the absolute human capital attainment) will fall. This evolution of human capital accumulation is accompanied by increasing inequality, within the group of college educated workers in particular. Further, we consider the comparative dynamics effect of an exogenous skill biased technological change represented by a positive shock to productivity of the skilled workers, hence to the college premium. We show that this will exacerbate the negative trends in the quality of basic education in relation to GDP growth. Countering this trend would therefore require an increase in the share of GDP spent on basic education, assuming that the institutional setup of the school system remains unchanged.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2516.

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Date of creation: 2009
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Handle: RePEc:ces:ceswps:_2516

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Related research

Keywords: basic and college education; skill premium; student-teacher ratio;

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References

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  1. Daniel Aaronson & Lisa Barrow & William Sander, 2002. "Teachers and student achievement in the Chicago public high schools," Working Paper Series, Federal Reserve Bank of Chicago WP-02-28, Federal Reserve Bank of Chicago.
  2. Alan Krueger, 1997. "Experimental Estimates of Education Production Functions," Working Papers, Princeton University, Department of Economics, Industrial Relations Section. 758, Princeton University, Department of Economics, Industrial Relations Section..
  3. Lakdawalla, Darius, 2006. "The Economics of Teacher Quality," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 49(1), pages 285-329, April.
  4. Diego Restuccia & Carlos Urrutia, 2002. "Intergenerational Persistence of Earnings: The Role of Early and College Education," Working Papers, University of Toronto, Department of Economics diegor-02-03, University of Toronto, Department of Economics.
  5. Sean P. Corcoran & William N. Evans & Robert S. Schwab, 2002. "Changing Labor Market Opportunities for Women and the Quality of Teachers 1957-1992," NBER Working Papers 9180, National Bureau of Economic Research, Inc.
  6. Eric A. Hanushek & John F. Kain & Steven G. Rivkin, 1998. "Teachers, Schools, and Academic Achievement," NBER Working Papers 6691, National Bureau of Economic Research, Inc.
  7. Frederick Flyer & Sherwin Rosen, 1994. "The New Economics of Teachers and Education," NBER Working Papers 4828, National Bureau of Economic Research, Inc.
  8. Caroline M. Hoxby & Andrew Leigh, 2004. "Pulled Away or Pushed Out? Explaining the Decline of Teacher Aptitude in the United States," American Economic Review, American Economic Association, American Economic Association, vol. 94(2), pages 236-240, May.
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  13. Betts, Julian R, 1998. "The Impact of Educational Standards on the Level and Distribution of Earnings," American Economic Review, American Economic Association, American Economic Association, vol. 88(1), pages 266-75, March.
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  15. Joshua D. Angrist & Victor Lavy, 1999. "Using Maimonides' Rule To Estimate The Effect Of Class Size On Scholastic Achievement," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 114(2), pages 533-575, May.
  16. Daron Acemoglu, 2000. "Technical Change, Inequality, and the Labor Market," NBER Working Papers 7800, National Bureau of Economic Research, Inc.
  17. Dan Goldhaber & Emily Anthony, 2007. "Can Teacher Quality Be Effectively Assessed? National Board Certification as a Signal of Effective Teaching," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 134-150, February.
  18. Charles T. Clotfelter & Helen F. Ladd & Jacob L. Vigdor, 2007. "How and Why do Teacher Credentials Matter for Student Achievement?," NBER Working Papers 12828, National Bureau of Economic Research, Inc.
  19. Christopher Jepsen & Steven Rivkin, 2002. "What is the Tradeoff Between Smaller Classes and Teacher Quality?," NBER Working Papers 9205, National Bureau of Economic Research, Inc.
  20. Gerhard Glomm & Michael Kaganovich, 2003. "Distributional Effects of Public Education in an Economy with Public Pensions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(3), pages 917-937, 08.
  21. Acemoglu, Daron, 1997. "Why Do New Technologies Complement Skills? Directed Technical Change and Wage Inequality," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1707, C.E.P.R. Discussion Papers.
  22. Robert Tamura, 2001. "Teachers, Growth, and Convergence," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 109(5), pages 1021-1059, October.
  23. Hoxby, Caroline Minter, 1996. "How Teachers' Unions Affect Education Production," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 111(3), pages 671-718, August.
  24. Su, Xuejuan, 2004. "The allocation of public funds in a hierarchical educational system," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 28(12), pages 2485-2510, December.
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Cited by:
  1. Luis Armando Galvis & Leonardo Bonilla Mejía, 2012. "Desigualdades regionales en el nivel educativo de los profesores en Colombia," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, Universidad Externado de Colombia - Facultad de Economía, vol. 14(26), pages 223-240, January-J.
  2. Gregory Gilpin & Michael Kaganovich, 2011. "The Quantity and Quality of Teachers: Dynamics of the Trade-off," Caepr Working Papers, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington 2011-006, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington.
  3. Luis Armando Galvis & Leonardo Bonilla Mejía, 2011. "Las desigualdades en la distribución del nivel educativo de los docentes en Colombia," DOCUMENTOS DE TRABAJO SOBRE ECONOMÍA REGIONAL, BANCO DE LA REPÚBLICA - ECONOMÍA REGIONAL 008918, BANCO DE LA REPÚBLICA - ECONOMÍA REGIONAL.
  4. Gilpin, Gregory A., 2011. "Reevaluating the effect of non-teaching wages on teacher attrition," Economics of Education Review, Elsevier, Elsevier, vol. 30(4), pages 598-616, August.

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