Teacher shortages, the business cycle, and teacher demand: A long-run perspective

This paper examines the historical relationships between teacher shortages, teacher demand, and the business cycle using Norwegian data covering a period of >160 years (1861–2024). We find a procyclical pattern in teacher shortages, in particular for the post-WW2 period. The post-WW2 results imply that doubling the unemployment rate reduces teacher shortage by about 10 percent. The finding corroborates evidence from other countries that the public sector hires employees with higher skills during recessions than during booms. In addition, teacher demand increases teacher shortages, where the finding is similar in OLS-models, IV-models, and a panel data approach for the pre-WW2 period. The results indicate that a ten percent increase in teacher demand raises teacher shortages by about 30 percent in the pre-WW2 period and about 40 percent in the post-WW2 period. The increased effects of teacher demand and the business cycles on teacher shortages over the 160-year-long period appear consistent with the centralization of school financing and teacher wage setting that took place after WW2.