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Teacher Labor Market Equilibrium and the Distribution of Student Achievement

Author

Listed:
  • Michael D. Bates
  • Michael Dinerstein
  • Andrew C. Johnston
  • Isaac Sorkin

Abstract

We study the equity and efficiency consequences of the allocation of teachers to schools. Within a district, wages are uniform across potential assignments. Because teachers tend to prefer schools with more advantaged students, this uniformity may lead to inequity among students. Because there might be match effects in teaching, this uniformity may lead to inefficient allocations. While we do observe inefficient allocations (there are meaningful gains from reallocation), surprisingly, we do not observe inequity: advantaged and disadvantaged students have teachers with similar value-added. To understand why uniform wages lead to inefficiency but not inequity, we use rich data from the teacher transfer system linked to test score data to estimate an equilibrium model of the teacher labor market. We find that the allocation is equitable because principals hire noisily, tending not to select their most effective applicants. Achieving most efficiency gains, however, requires differentiated wages that compensate teachers for match output.

Suggested Citation

  • Michael D. Bates & Michael Dinerstein & Andrew C. Johnston & Isaac Sorkin, 2022. "Teacher Labor Market Equilibrium and the Distribution of Student Achievement," NBER Working Papers 29728, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:29728
    Note: ED IO LS
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    More about this item

    JEL classification:

    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

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