A shortage of teachers in primary and secondary schools in the Netherlands is expected in the near future as a large part of the current workforce will retire. Recently, the Dutch government has decided to increase wages of teachers. This paper qualitatively assesses the impact of three options for increasing teaching wages on teacher supply in the medium term: increasing wages at the start of the career, increasing wages at mid career or increasing wages at the end of the career. The first option, spending the whole additional budget on raising wages at the start of the career, is likely to lead to the largest increase in the supply of teachers. The main advantage of allocating the whole additional budget to the starting salaries of teachers is that a large share of the budget can be used for the ‘new supply’ of teachers. The current number of teachers in this group is relatively small and the wage level at the start of the career is low. As a consequence, there is budget for a relatively large increase of wages (more than for the two other options). In addition, the wage elasticity of teacher supply seems relatively large at the start of the career. However, the main effect will come from new enrolment in teacher studies and it takes a least four years before these new students can start in a teaching job. In addition, the wage elasticity of enrolment for teacher studies is unknown. Another disadvantage of this option is that the current level of teaching wages at the start of the career seems quite competitive as it equals the average level of starting wages in the market sector. At mid career teachers salaries are not competitive. Raising wages at the start of the career also has the disadvantage of making the age-wage profile less steep. This wage profile would stimulate enrolment in teacher studies and working in education at the start of the career but would not stimulate a long working career in education. Raising wages at the start of the career targets at only one source of new supply and is therefore more risky than the other options. The main advantage of the second option, raising teaching wages at mid career, is that it focuses on many different sources of teachers supply including the reservoir of young teachers. In addition, this option makes the age-wage profiles steeper, which increases the career opportunities for young teachers and makes it easier to keep them in a teaching job. Moreover, the relative wages of teachers at mid career are lower than at the start or the end of the career, which is another advantage of this option. However, the potential wage increase and the wage elasticity of teacher supply are probably smaller than in the case of the first option. For the third option, raising wages at the end of the career, the wage increase and wage elasticity of teacher supply will be even smaller than for the second option. We expect that raising wages at the end of the career is not very effective. However, policy measures that make working as a teacher more attractive compared to not working might be very effective for teachers at the end of their career. The reservoir of potential teachers is large at the end of the career and the wage elasticity might be large for this type of measures.
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Paper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Memoranda with number
194.
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