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Local amenities, unobserved quality, and market clearing: Adjusting teacher compensation to provide equal education opportunities

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  • Tuck, Bradford
  • Berman, Matthew
  • Hill, Alexandra

Abstract

Local school districts differ in their ability to pay for teacher quality, and in the amenities they offer as places to live and work. Market clearing with heterogeneous quality yields geographically varying teacher salary levels that confound scarcity with unobserved differences in quality. The paper discusses identification and estimation of a model of quality-adjusted teacher salaries in local markets with unobserved market-clearing prices. Exogenous variables in the model include community and district characteristics, job characteristics and working conditions, and individual characteristics. We apply the model to estimate the relative cost of providing comparably qualified teachers for urban and rural public schools in the state of Alaska, which has high geographic variation in amenities and local financial resources. The quality-adjusted geographic salary differentials implied by the results suggest much larger compensation differentials for isolated rural schools than most of these school districts can afford under current levels of state support.

Suggested Citation

  • Tuck, Bradford & Berman, Matthew & Hill, Alexandra, 2009. "Local amenities, unobserved quality, and market clearing: Adjusting teacher compensation to provide equal education opportunities," Economics of Education Review, Elsevier, vol. 28(1), pages 58-66, February.
    • Handle: RePEc:eee:ecoedu:v:28:y:2009:i:1:p:58-66
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    References listed on IDEAS

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    1. Eric A. Hanushek & John F. Kain & Steven G. Rivkin & Daniel M. O'Brien, 2005. "The Market for Teacher Quality," Discussion Papers 04-025, Stanford Institute for Economic Policy Research.
    2. Donald Boyd & Hamilton Lankford & Susanna Loeb & James Wyckoff, 2003. "Analyzing the Determinants of the Matching Public School Teachers to Jobs: Estimating Compensating Differentials in Imperfect Labor Markets," NBER Working Papers 9878, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Figlio, D. & Karbownik, K. & Salvanes, K.G., 2016. "Education Research and Administrative Data," Handbook of the Economics of Education,, Elsevier.
    2. David McArthur & Inge Thorsen, 2011. "Determinants of internal migration in Norway," ERSA conference papers ersa10p532, European Regional Science Association.
    3. David Philip McArthur & Sylvia Encheva & Inge Thorsen, 2012. "Exploring the Determinants of Regional Unemployment Disparities in Small Data Sets," International Regional Science Review, , vol. 35(4), pages 442-463, October.
    4. David Philip Mcarthur & Inge Thorsen & Jan Ubøe, 2010. "A Micro‐Simulation Approach to Modelling Spatial Unemployment Disparities," Growth and Change, Wiley Blackwell, vol. 41(3), pages 374-402, September.
    5. Hazans, Mihails, 2010. "Teacher Pay, Class Size and Local Governments: Evidence from the Latvian Reform," IZA Discussion Papers 5291, Institute of Labor Economics (IZA).

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