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Teacher pay and school productivity: Exploiting wage regulation

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  • Britton, Jack
  • Propper, Carol

Abstract

The impact of teacher pay on school productivity is a central concern for governments worldwide, yet evidence is mixed. In this paper we exploit a feature of teacher labour markets to determine the impact of teacher wages. Teacher wages are commonly set in a manner that results in flat wages across heterogeneous labour markets. This creates an exogenous gap between the outside labour market and inside (regulated) wage for teachers. We use the centralised wage regulation of teachers in England to examine the effect of pay on school performance. We use data on over 3000 schools containing around 200,000 teachers who educate around half a million children per year. We find that teachers respond to pay. A ten percent shock to the wage gap between local labour market and teacher wages results in an average loss of around 2% in average school performance in the key exams taken at the end of compulsory schooling in England.

Suggested Citation

  • Britton, Jack & Propper, Carol, 2016. "Teacher pay and school productivity: Exploiting wage regulation," Journal of Public Economics, Elsevier, vol. 133(C), pages 75-89.
  • Handle: RePEc:eee:pubeco:v:133:y:2016:i:c:p:75-89
    DOI: 10.1016/j.jpubeco.2015.12.004
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    References listed on IDEAS

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    1. Hendricks, Matthew D., 2014. "Does it pay to pay teachers more? Evidence from Texas," Journal of Public Economics, Elsevier, vol. 109(C), pages 50-63.
    2. Victor Lavy, 2009. "Performance Pay and Teachers' Effort, Productivity, and Grading Ethics," American Economic Review, American Economic Association, vol. 99(5), pages 1979-2011, December.
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    5. Eric A. Hanushek, 2003. "The Failure of Input-Based Schooling Policies," Economic Journal, Royal Economic Society, vol. 113(485), pages 64-98, February.
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    7. Duncombe, William & Yinger, John, 1998. "School Finance Reform: Aid Formulas and Equity Objectives," National Tax Journal, National Tax Association;National Tax Journal, vol. 51(2), pages 239-262, June.
    8. Michael F. Lovenheim, 2009. "The Effect of Teachers' Unions on Education Production: Evidence from Union Election Certifications in Three Midwestern States," Journal of Labor Economics, University of Chicago Press, vol. 27(4), pages 525-587, October.
    9. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
    10. Weiss, Andrew W, 1980. "Job Queues and Layoffs in Labor Markets with Flexible Wages," Journal of Political Economy, University of Chicago Press, vol. 88(3), pages 526-538, June.
    11. Luke Sibieta, 2015. "The distribution of school funding and inputs in England: 1993-2013," IFS Working Papers W15/10, Institute for Fiscal Studies.
    12. William Duncombe & John Yinger, 2011. "Making do: state constraints and local responses in California’s education finance system," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 18(3), pages 337-368, June.
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    Citations

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    Cited by:

    1. José María Cabrera & Dinand Webbink., 2018. "Do higher salaries yield better teachers and better student outcomes?," Documentos de Trabajo/Working Papers 1804, Facultad de Ciencias Empresariales y Economia. Universidad de Montevideo..
    2. repec:bla:econom:v:85:y:2018:i:340:p:701-734 is not listed on IDEAS
    3. Westphal, Matthias, 2017. "More teachers, smarter students? Potential side effects of the German educational expansion," Ruhr Economic Papers 721, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    4. Nagler, Markus & Piopiunik, Marc & West, Martin R., 2019. "Weak Markets, Strong Teachers: Recession At Career Start and Teacher Effectiveness," Rationality and Competition Discussion Paper Series 137, CRC TRR 190 Rationality and Competition.
    5. Cabrera, José María & Webbink, Dinand, 2018. "Do higher salaries yield better teachers and better student outcomes?," MPRA Paper 86972, University Library of Munich, Germany.
    6. repec:eee:pubeco:v:152:y:2017:i:c:p:47-54 is not listed on IDEAS
    7. Juan Saavedra & Dario Maldonado & Lucrecia Santibanez & Luis Omar Herrera Prada, 2017. "Premium or Penalty? Labor Market Returns to Novice Public Sector Teachers," NBER Working Papers 24012, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Teacher pay; School productivity;

    JEL classification:

    • I2 - Health, Education, and Welfare - - Education
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J4 - Labor and Demographic Economics - - Particular Labor Markets

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