Competition, wages and teacher sorting: four lessons learned from a voucher reform
AbstractThis paper studies how local school competition affects teacher wages at markets where wages are set via individual wage bargaining. Using regional variation in private school entry generated by a Swedish reform which allowed private schools to enter freely and a comprehensive matched employer employee data covering all high school teachers in Sweden over 16 years, I analyze the effects of competition on wages as well as labor flows. The results suggest that competition translates into higher wages, also for teachers in public schools. While the average increases are modest new teachers gain 2 percent and high ability teachers in math and science receive 4 percent higher wages in the most competitive areas compared to areas without any competition from private schools. Several robustness checks support a causal interpretation of the results which together highlight the potential gains from school competition through a more differentiated wage setting of teachers.
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Bibliographic InfoPaper provided by IFAU - Institute for Evaluation of Labour Market and Education Policy in its series Working Paper Series with number 2010:8.
Length: 41 pages
Date of creation: 07 Jun 2010
Date of revision:
Publication status: Published as Hensvik, Lena, 'Competition, Wages and Teacher Sorting: Lessons Learned from a Voucher Reform' in The Economic Journal, 2012, pages 799-824.
Private school competition; teacher wages; monopsony power;
Find related papers by JEL classification:
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-07-03 (All new papers)
- NEP-EDU-2010-07-03 (Education)
- NEP-LAB-2010-07-03 (Labour Economics)
- NEP-URE-2010-07-03 (Urban & Real Estate Economics)
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- Chiara Binelli & Marta Rubio Codina, 2012.
"The returns to private education: evidence from Mexico,"
IFS Working Papers
W12/08, Institute for Fiscal Studies.
- Binelli, Chiara & Rubio-Codina, Marta, 2013. "The Returns to Private Education: Evidence from Mexico," Economics of Education Review, Elsevier, vol. 36(C), pages 198-215.
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