IDEAS home Printed from https://ideas.repec.org/a/uwp/jhriss/v60y2025i2p538-577.html
   My bibliography  Save this article

Premium or Penalty? Labor Market Returns to Novice Public Sector Teachers

Author

Listed:
  • Juan Esteban Saavedra
  • Dario Maldonado
  • Lucrecia Santibañez
  • Luis Omar Herrera-Prada

Abstract

Countries spend education budgets primarily on teacher payroll. An unresolved debate on whether teachers earn a premium or a penalty relative to other occupations complicates teacher compensation decisions. A national screening exam in Colombia and administrative data show that teaching candidates scoring above the passing cutoff have greater annual earnings early in their tenure than those below the cutoff. Extension of regression discontinuity methods away from the cutoff indicate similarly attractive earnings premia for high-scoring applicants. Despite sizeable earnings premia, teachers hold outside jobs, and teaching does not attract top college graduates, underscoring challenges to improving education solely through teacher compensation.

Suggested Citation

  • Juan Esteban Saavedra & Dario Maldonado & Lucrecia Santibañez & Luis Omar Herrera-Prada, 2025. "Premium or Penalty? Labor Market Returns to Novice Public Sector Teachers," Journal of Human Resources, University of Wisconsin Press, vol. 60(2), pages 538-577.
    • Handle: RePEc:uwp:jhriss:v:60:y:2025:i:2:p:538-577
    Note: DOI: https://doi.org/10.3368/jhr.0620-10971R1
    as

    Download full text from publisher

    File URL: http://jhr.uwpress.org/cgi/reprint/60/2/538
    Download Restriction: A subscription is required to access pdf files. Pay per article is available.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or

    for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Angrist, Joshua D. & Guryan, Jonathan, 2008. "Does teacher testing raise teacher quality? Evidence from state certification requirements," Economics of Education Review, Elsevier, vol. 27(5), pages 483-503, October.
    2. Thomas J. Kane & Douglas O. Staiger, 2008. "Estimating Teacher Impacts on Student Achievement: An Experimental Evaluation," NBER Working Papers 14607, National Bureau of Economic Research, Inc.
    3. Ernesto Dal Bó & Frederico Finan & Martín A. Rossi, 2013. "Strengthening State Capabilities: The Role of Financial Incentives in the Call to Public Service," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(3), pages 1169-1218.
    4. Charles T. Clotfelter & Helen F. Ladd & Jacob L. Vigdor, 2010. "Teacher Credentials and Student Achievement in High School: A Cross-Subject Analysis with Student Fixed Effects," Journal of Human Resources, University of Wisconsin Press, vol. 45(3).
    5. Bengt Holmström, 1999. "Managerial Incentive Problems: A Dynamic Perspective," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(1), pages 169-182.
    6. Ricardo Estrada, 2019. "Rules versus Discretion in Public Service: Teacher Hiring in Mexico," Journal of Labor Economics, University of Chicago Press, vol. 37(2), pages 545-579.
    7. Jonah E. Rockoff, 2004. "The Impact of Individual Teachers on Student Achievement: Evidence from Panel Data," American Economic Review, American Economic Association, vol. 94(2), pages 247-252, May.
    8. Joppe de Ree & Karthik Muralidharan & Menno Pradhan & Halsey Rogers, 2015. "Double for Nothing? Experimental Evidence on the Impact of an Unconditional Teacher Salary Increase on Student Performance in Indonesia," NBER Working Papers 21806, National Bureau of Economic Research, Inc.
    9. Barbara Bruns & Javier Luque & Noah Yarrow, 2015. "Great Teachers : How to Raise Student Learning in Latin America and the Caribbean," World Bank Publications - Books, The World Bank Group, number 20488, April.
    10. Britton, Jack & Propper, Carol, 2016. "Teacher pay and school productivity: Exploiting wage regulation," Journal of Public Economics, Elsevier, vol. 133(C), pages 75-89.
    11. Mizala, Alejandra & Ñopo, Hugo, 2016. "Measuring the relative pay of school teachers in Latin America 1997–2007," International Journal of Educational Development, Elsevier, vol. 47(C), pages 20-32.
    12. Bau,Natalie & Das,Jishnu, 2017. "The misallocation of pay and productivity in the public sector : evidence from the labor market for teachers," Policy Research Working Paper Series 8050, The World Bank.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Balza, Lenin & De Los Rios, Camilo & Jimenez Mori, Raul Alberto & Manzano, Osmel, 2021. "The Local Human Capital Costs of Oil Exploitation," IDB Publications (Working Papers) 11379, Inter-American Development Bank.
    2. Dulce-Salcedo, Olga Victoria & Maldonado, Darío & Sánchez, Fabio, 2022. "Is the proportion of female STEM teachers in secondary education related to women’s enrollment in tertiary education STEM programs?," International Journal of Educational Development, Elsevier, vol. 91(C).
    3. Brutti, Zelda & Sánchez Torres, Fabio, 2022. "Turning around teacher quality in Latin America: Renewed confidence and lessons from Colombia," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 62-93.
    4. Dai, Fengyan & Xu, Lei & Zhu, Yu, 2022. "Higher education expansion and supply of teachers in China," China Economic Review, Elsevier, vol. 71(C).
    5. Balza, Lenin H. & De Los Rios, Camilo & Jimenez Mori, Raul & Manzano, Osmel, 2025. "The local human capital costs of oil exploitation," Journal of Development Economics, Elsevier, vol. 173(C).
    6. Ricardo Estrada & María Lombardi, 2020. "Skills and Selection into Teaching: Evidence from Latin America," Department of Economics Working Papers wp_gob_2020_10, Universidad Torcuato Di Tella.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Andrew Agopsowicz & Chris Robinson & Ralph Stinebrickner & Todd Stinebrickner, 2020. "Careers and Mismatch for College Graduates: College and Noncollege Jobs," Journal of Human Resources, University of Wisconsin Press, vol. 55(4), pages 1194-1221.
    2. Jose Maria Cabrera & Dinand Webbink, 2020. "Do Higher Salaries Yield Better Teachers and Better Student Outcomes?," Journal of Human Resources, University of Wisconsin Press, vol. 55(4), pages 1222-1257.
    3. Papay, John P. & Kraft, Matthew A., 2015. "Productivity returns to experience in the teacher labor market: Methodological challenges and new evidence on long-term career improvement," Journal of Public Economics, Elsevier, vol. 130(C), pages 105-119.
    4. Buddin, Richard, 2010. "How effective are Los Angeles elementary teachers and schools?," MPRA Paper 27366, University Library of Munich, Germany.
    5. Canales, Andrea & Maldonado, Luis, 2018. "Teacher quality and student achievement in Chile: Linking teachers' contribution and observable characteristics," International Journal of Educational Development, Elsevier, vol. 60(C), pages 33-50.
    6. Busso, Matias & Montaño, Sebastián & Muñoz-Morales, Juan & Pope, Nolan G., 2024. "The unintended consequences of merit-based teacher selection: Evidence from a large-scale reform in Colombia," Journal of Public Economics, Elsevier, vol. 239(C).
    7. Fraenkel, Rebecca Cannon, 2022. "Local labor markets and job match quality: Teachers," Labour Economics, Elsevier, vol. 78(C).
    8. David K. Evans & Fei Yuan & Deon Filmer, 2020. "Are Teachers in Africa Poorly Paid? Evidence from 15 Countries," Working Papers 538, Center for Global Development.
    9. Drouet Arias, Marcelo & Elacqua, Gregory & Marotta, Luana & Rosa, Leonardo, 2022. "Does an Education Major Matter for Teaching?: The Relationship between Teachers Degree and Student Achievement," IDB Publications (Working Papers) 12638, Inter-American Development Bank.
    10. Metzler, Johannes & Woessmann, Ludger, 2012. "The impact of teacher subject knowledge on student achievement: Evidence from within-teacher within-student variation," Journal of Development Economics, Elsevier, vol. 99(2), pages 486-496.
    11. Eric S. Taylor & John H. Tyler, 2011. "The Effect of Evaluation on Performance: Evidence from Longitudinal Student Achievement Data of Mid-career Teachers," NBER Working Papers 16877, National Bureau of Economic Research, Inc.
    12. Goel, Deepti & Barooah, Bidisha, 2018. "Drivers of Student Performance: Evidence from Higher Secondary Public Schools in Delhi," GLO Discussion Paper Series 231, Global Labor Organization (GLO).
    13. Azam, Mehtabul & Kingdon, Geeta Gandhi, 2015. "Assessing teacher quality in India," Journal of Development Economics, Elsevier, vol. 117(C), pages 74-83.
    14. Zheng, Lei & Qi, Xiang & Zhang, Chongjiu, 2023. "Can improvements in teacher quality reduce the cognitive gap between urban and rural students in China?," International Journal of Educational Development, Elsevier, vol. 100(C).
    15. C. Kirabo Jackson, 2014. "Teacher Quality at the High School Level: The Importance of Accounting for Tracks," Journal of Labor Economics, University of Chicago Press, vol. 32(4), pages 645-684.
    16. Gershenson, Seth, 2021. "Identifying and Producing Effective Teachers," IZA Discussion Papers 14096, Institute of Labor Economics (IZA).
    17. Collier, Trevor C., 2013. "Teacher Qualifications And Student Achievement: A Panel Data Analysis," Review of Applied Economics, Lincoln University, Department of Financial and Business Systems, vol. 9(01-2), January.
    18. Gjefsen, Hege Marie, 2020. "Wages, teacher recruitment, and student achievement," Labour Economics, Elsevier, vol. 65(C).
    19. Chingos, Matthew M. & Peterson, Paul E., 2011. "It's easier to pick a good teacher than to train one: Familiar and new results on the correlates of teacher effectiveness," Economics of Education Review, Elsevier, vol. 30(3), pages 449-465, June.
    20. Christopher Neilson & Sebastian Gallegos & Franco Calle, 2019. "Screening and Recruiting Talent At Teacher Colleges Using Pre-College Academic Achievement," Working Papers 636, Princeton University, Department of Economics, Industrial Relations Section..

    More about this item

    JEL classification:

    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:uwp:jhriss:v:60:y:2025:i:2:p:538-577. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://jhr.uwpress.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.