IDEAS home Printed from https://ideas.repec.org/p/bri/uobdis/19-717.html
   My bibliography  Save this paper

Deregulating Teacher Labor Markets

Author

Listed:
  • Simon Burgess
  • Ellen Greaves
  • Richard Murphy

Abstract

A common feature of public sector labor markets is the use of pay scales. This paper examines how the removal of pay scales impacts productivity, by exploiting a reform that compelled all schools in England to replace pay scales with school-designed performance related pay schemes. We find that schools in labor markets with better outside options for teachers saw relatively higher increases in teacher pay. Schools in these areas relatively increase their spending on teachers, have higher teacher retention and larger improvements in student tests scores. These effects are largest in schools with the high proportions of disadvantaged students. We conclude that the pay rigidities in the form of centralized pay schedules result in a misallocation of resources, by preventing such schools from retaining their teachers.

Suggested Citation

  • Simon Burgess & Ellen Greaves & Richard Murphy, 2019. "Deregulating Teacher Labor Markets," Bristol Economics Discussion Papers 19/717, School of Economics, University of Bristol, UK.
    • Handle: RePEc:bri:uobdis:19/717
    as

    Download full text from publisher

    File URL: http://www.bristol.ac.uk/efm/media/workingpapers/working_papers/pdffiles/dp19717.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Barbara Biasi & Heather Sarsons, 2020. "Flexible Wages, Bargaining, and the Gender Gap," NBER Working Papers 27894, National Bureau of Economic Research, Inc.
    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.
    3. Greaves, Ellen & Sibieta, Luke, 2019. "Constrained optimisation? Teacher salaries, school resources and student achievement," Economics of Education Review, Elsevier, vol. 73(C).
    4. Carol Propper & John Van Reenen, 2010. "Can Pay Regulation Kill? Panel Data Evidence on the Effect of Labor Markets on Hospital Performance," Journal of Political Economy, University of Chicago Press, vol. 118(2), pages 222-273, April.
    5. Esther Duflo & Rema Hanna & Stephen P. Ryan, 2012. "Incentives Work: Getting Teachers to Come to School," American Economic Review, American Economic Association, vol. 102(4), pages 1241-1278, June.
    6. 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.
    7. Meyer, Bruce D. & Mittag, Nikolas, 2017. "Misclassification in binary choice models," Journal of Econometrics, Elsevier, vol. 200(2), pages 295-311.
    8. Britton, Jack & Propper, Carol, 2016. "Teacher pay and school productivity: Exploiting wage regulation," Journal of Public Economics, Elsevier, vol. 133(C), pages 75-89.
    9. Berlinski, Samuel & Ramos, Alejandra, 2020. "Teacher mobility and merit pay: Evidence from a voluntary public award program," Journal of Public Economics, Elsevier, vol. 186(C).
    10. Donald Boyd & Hamilton Lankford & Susanna Loeb & James Wyckoff, 2005. "The draw of home: How teachers' preferences for proximity disadvantage urban schools," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 24(1), pages 113-132.
    11. Woessmann, Ludger, 2011. "Cross-country evidence on teacher performance pay," Economics of Education Review, Elsevier, vol. 30(3), pages 404-418, June.
    12. Simon Burgess & Marisa Ratto, 2003. "The Role of Incentives in the Public Sector: Issues and Evidence," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 19(2), pages 285-300, Summer.
    13. Avinash Dixit, 2002. "# Incentives and Organizations in the Public Sector: An Interpretative Review," Journal of Human Resources, University of Wisconsin Press, vol. 37(4), pages 696-727.
    14. Francis Green & Stephen Machin & Richard Murphy & Yu Zhu, 2008. "Competition for private and state school teachers," CEE Discussion Papers 0094, Centre for the Economics of Education, LSE.
    15. Thomas S. Dee & Benjamin J. Keys, 2004. "Does merit pay reward good teachers? Evidence from a randomized experiment," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 23(3), pages 471-488.
    16. Donald Boyd & Hamilton Lankford & Susanna Loeb & James Wyckoff, 2005. "Explaining the Short Careers of High-Achieving Teachers in Schools with Low-Performing Students," American Economic Review, American Economic Association, vol. 95(2), pages 166-171, May.
    17. Karthik Muralidharan & Venkatesh Sundararaman, 2011. "Teacher Performance Pay: Experimental Evidence from India," Journal of Political Economy, University of Chicago Press, vol. 119(1), pages 39-77.
    18. Brian A. Jacob & Lars Lefgren, 2005. "Principals as Agents: Subjective Performance Measurement in Education," NBER Working Papers 11463, National Bureau of Economic Research, Inc.
    19. Barbieri, Gianna & Rossetti, Claudio & Sestito, Paolo, 2011. "The determinants of teacher mobility: Evidence using Italian teachers’ transfer applications," Economics of Education Review, Elsevier, vol. 30(6), pages 1430-1444.
    20. Roland G. Fryer, 2013. "Teacher Incentives and Student Achievement: Evidence from New York City Public Schools," Journal of Labor Economics, University of Chicago Press, vol. 31(2), pages 373-407.
    21. James Buchan & Steven Black, 2011. "The Impact of Pay Increases on Nurses' Labour Market: A Review of Evidence from Four OECD Countries," OECD Health Working Papers 57, OECD Publishing.
    22. Jacob, Brian A. & Lefgren, Lars, 2005. "Principals as Agents: Subjective Performance Measures in Education," Working Paper Series rwp05-040, Harvard University, John F. Kennedy School of Government.
    23. Simon Burgess & Marisa Ratto, 2003. "The Role of Incentives in the Public Sector: Issues and Evidence," The Centre for Market and Public Organisation 03/071, The Centre for Market and Public Organisation, University of Bristol, UK.
    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. Willén, Alexander, 2021. "Decentralization of wage determination: Evidence from a national teacher reform," Journal of Public Economics, Elsevier, vol. 198(C).

    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. Baethge, Caroline & Fiedler, Marina, 2016. "Aligning mission preferences: Does self-selection foster performance in working groups?," Passauer Diskussionspapiere, Betriebswirtschaftliche Reihe B-18-16, University of Passau, Faculty of Business and Economics.
    2. 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.
    3. repec:dau:papers:123456789/12197 is not listed on IDEAS
    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.
    5. Ashraf, Nava & Bandiera, Oriana & Jack, B. Kelsey, 2014. "No margin, no mission? A field experiment on incentives for public service delivery," Journal of Public Economics, Elsevier, vol. 120(C), pages 1-17.
    6. Helen Simpson, 2009. "Productivity In Public Services," Journal of Economic Surveys, Wiley Blackwell, vol. 23(2), pages 250-276, April.
    7. Vegas, E & Ganimian, A. J., 2013. "Theory and Evidence on Teacher Policies in Developed and Developing Countries," Working Paper 104291, Harvard University OpenScholar.
    8. Andrew Dustan & Stanislao Maldonado & Juan Manuel Hernandez-Agramonte, 2018. "Motivating bureaucrats with non-monetary incentives when state capacity is weak: Evidence from large-scale field experiments in Peru," Working Papers 136, Peruvian Economic Association.
    9. Derek Neal, 2011. "The Design of Performance Pay in Education," NBER Working Papers 16710, National Bureau of Economic Research, Inc.
    10. Woessmann, Ludger, 2011. "Cross-country evidence on teacher performance pay," Economics of Education Review, Elsevier, vol. 30(3), pages 404-418, June.
    11. Burgess, Simon, 2016. "Human Capital and Education: The State of the Art in the Economics of Education," IZA Discussion Papers 9885, Institute of Labor Economics (IZA).
    12. Berlinski, Samuel & Ramos, Alejandra, 2020. "Teacher mobility and merit pay: Evidence from a voluntary public award program," Journal of Public Economics, Elsevier, vol. 186(C).
    13. Felipe Barrera-Osorio & Dario Maldonado & Catherine Rodríguez, 2012. "Calidad de la educación básica y media en Colombia: diagnóstico y propuestas," Documentos de Trabajo 10078, Universidad del Rosario.
    14. Carolyn J. Heinrich & Gerald Marschke, 2010. "Incentives and their dynamics in public sector performance management systems," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 29(1), pages 183-208.
    15. Marsden, David, 2015. "Teachers and performance pay in 2014: first results of a survey," LSE Research Online Documents on Economics 61030, London School of Economics and Political Science, LSE Library.
    16. Andrea Lepine, 2016. "Teacher Incentives and Student Performance: Evidence from Brazil," Working Papers, Department of Economics 2016_18, University of São Paulo (FEA-USP).
    17. Geys, Benny & Heggedal, Tom-Reiel & Sørensen, Rune J., 2017. "Are bureaucrats paid like CEOs? Performance compensation and turnover of top civil servants," Journal of Public Economics, Elsevier, vol. 152(C), pages 47-54.
    18. Hai-Anh H. Dang & Elizabeth M. King, 2016. "Incentives and teacher effort," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 24(4), pages 621-660, October.
    19. Brehm, Margaret & Imberman, Scott A. & Lovenheim, Michael F., 2017. "Achievement effects of individual performance incentives in a teacher merit pay tournament," Labour Economics, Elsevier, vol. 44(C), pages 133-150.
    20. Montalbo, Adrien, 2021. "Schools without a law: Primary education in France from the Revolution to the Guizot Law," Explorations in Economic History, Elsevier, vol. 79(C).
    21. Ken Yahagi, 2023. "Sanctions and rewards with a motivated agent," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(4), pages 2057-2067, June.

    More about this item

    Keywords

    Pay Scales; Teachers; Performance Related Pay; Productivity;
    All these keywords.

    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:bri:uobdis:19/717. 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: Vicky Jackson (email available below). General contact details of provider: https://edirc.repec.org/data/sebriuk.html .

    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.