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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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    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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