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Does Wage Regulation Harm Kids? Evidence from English Schools

Author

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  • Carol Propper
  • Jack Britton

Abstract

Teacher wages are commonly subject to centralised wage bargaining. This results in flat teacher wages across heterogeneous labour markets and means teacher wages will be relatively lower where local labour market wages are high. The implication is that teacher output will be lower in high outside wage areas. This paper investigates whether this relationship between local labour market wages and school performance exists. We exploit the centralised wage regulation of teachers in England using data on over 3000 schools containing around 200,000 teachers who educate around half a million children per year. We find that regulation decreases educational output. Schools add less value to their pupils in areas where the outside option for teachers is higher. This is not offset by gains in lower outside wage areas.

Suggested Citation

  • Carol Propper & Jack Britton, 2012. "Does Wage Regulation Harm Kids? Evidence from English Schools," The Centre for Market and Public Organisation 12/293, The Centre for Market and Public Organisation, University of Bristol, UK.
    • Handle: RePEc:bri:cmpowp:12/293
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    File URL: http://www.bristol.ac.uk/cmpo/publications/papers/2012/wp293.pdf
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    References listed on IDEAS

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    1. Simon Burgess & Carol Propper & Marisa Ratto & Emma Tominey, 2017. "Incentives in the Public Sector: Evidence from a Government Agency," Economic Journal, Royal Economic Society, vol. 127(605), pages 117-141, October.
    2. Eric P. Bettinger, 2012. "Paying to Learn: The Effect of Financial Incentives on Elementary School Test Scores," The Review of Economics and Statistics, MIT Press, vol. 94(3), pages 686-698, August.
    3. Ehrenberg, Ronald G. & Brewer, Dominic J., 1994. "Do school and teacher characteristics matter? Evidence from High School and Beyond," Economics of Education Review, Elsevier, vol. 13(1), pages 1-17, March.
    4. Atkinson, Adele & Burgess, Simon & Croxson, Bronwyn & Gregg, Paul & Propper, Carol & Slater, Helen & Wilson, Deborah, 2009. "Evaluating the impact of performance-related pay for teachers in England," Labour Economics, Elsevier, vol. 16(3), pages 251-261, June.
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    Cited by:

    1. Rowena Crawford & Richard Disney, 2015. "Wage regulation and the quality of police officer recruits," IFS Working Papers W15/19, Institute for Fiscal Studies.
    2. Yi Long & Chris Nyland & Russell Smyth, 2016. "Fiscal Decentralisation, the Knowledge Economy and School Teachers’ Wages in Urban China," Monash Economics Working Papers 13-16, Monash University, Department of Economics.
    3. Gabriele Cardullo, 2017. "The Welfare and Employment Effects of Centralized Public Sector Wage Bargaining," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 19(2), pages 490-510, April.

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    More about this item

    Keywords

    Teacher Wages; Centralised Pay Regulation; School Performance; School Value Added;
    All these keywords.

    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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