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The Quantity and Quality of Teachers: A Dynamic Trade-off

  • Gregory Gilpin
  • Michael Kaganovich

We study the dynamics of the quantity and quality of teachers in the framework of dynamic general equilibrium OLG model. The quantity and quality are jointly set by a government agency wishing to maximize the quality of basic education per student while being bound by teachers’ collective bargaining agreement which equalizes teacher pay. Our model features two stages of education: basic and advanced (college), the latter being required of teachers. The cost of hiring teachers is influenced by the outside opportunities that college educated individuals have in the production sector. We show that this factor strengthens in the process of endogenous growth and moreover that it pushes the optimal trade-off between quantity and quality of teachers in the direction of the former. Namely, the number of teachers hired will grow over time while their relative quality (but not the absolute human capital attainment) will fall. This evolution of human capital accumulation is accompanied by increasing inequality, within the group of college educated workers in particular. Further, we consider the comparative dynamics effect of an exogenous skill biased technological change represented by a positive shock to productivity of the skilled workers, hence to the college premium. We show that this will exacerbate the negative trends in the quality of basic education in relation to GDP growth. Countering this trend would therefore require an increase in the share of GDP spent on basic education, assuming that the institutional setup of the school system remains unchanged.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2516.

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Date of creation: 2009
Date of revision:
Handle: RePEc:ces:ceswps:_2516
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  1. Lakdawalla, Darius, 2006. "The Economics of Teacher Quality," Journal of Law and Economics, University of Chicago Press, vol. 49(1), pages 285-329, April.
  2. Charles T. Clotfelter & Helen F. Ladd & Jacob L. Vigdor, 2007. "How and Why do Teacher Credentials Matter for Student Achievement?," NBER Working Papers 12828, National Bureau of Economic Research, Inc.
  3. Glomm, Gerhard & Ravikumar, B, 1992. "Public versus Private Investment in Human Capital Endogenous Growth and Income Inequality," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 818-34, August.
  4. repec:oup:qjecon:v:114:y:1999:i:2:p:497-532 is not listed on IDEAS
  5. Diego Restuccia & Carlos Urrutia, 2004. "Intergenerational Persistence of Earnings: The Role of Early and College Education," American Economic Review, American Economic Association, vol. 94(5), pages 1354-1378, December.
  6. Daniel Aaronson & Lisa Barrow & William Sander, 2002. "Teachers and student achievement in the Chicago public high schools," Working Paper Series WP-02-28, Federal Reserve Bank of Chicago.
  7. Daron Acemoglu, 2000. "Technical Change, Inequality, and the Labor Market," NBER Working Papers 7800, National Bureau of Economic Research, Inc.
  8. Flavio Cunha & James Heckman, 2007. "The Technology of Skill Formation," NBER Working Papers 12840, National Bureau of Economic Research, Inc.
  9. Flyer, Fredrick & Rosen, Sherwin, 1997. "The New Economics of Teachers and Education," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages S104-39, January.
  10. Huggett, Mark & Ventura, Gustavo & Yaron, Amir, 2006. "Human capital and earnings distribution dynamics," Journal of Monetary Economics, Elsevier, vol. 53(2), pages 265-290, March.
  11. David Card & Alan Krueger, 1990. "Does School Quality Matter? Returns to Education and the Characteristics of Public Schools in the United States," Working Papers 645, Princeton University, Department of Economics, Industrial Relations Section..
  12. Steven G. Rivkin & Eric A. Hanushek & John F. Kain, 2005. "Teachers, Schools, and Academic Achievement," Econometrica, Econometric Society, vol. 73(2), pages 417-458, 03.
  13. Eric A. Hanushek & John F. Kain & Steven G. Rivkin & Daniel M. O'Brien, 2005. "The Market for Teacher Quality," Discussion Papers 04-025, Stanford Institute for Economic Policy Research.
  14. Christopher Jepsen & Steven Rivkin, 2002. "What is the Tradeoff Between Smaller Classes and Teacher Quality?," NBER Working Papers 9205, National Bureau of Economic Research, Inc.
  15. Zvi Eckstein & Itzhak Zilcha, 1991. "The Effects of Compulsory Schooling on Growth, Income Distribution and Welfare," Boston University - Institute for Economic Development 20, Boston University, Institute for Economic Development.
  16. Su, Xuejuan, 2004. "The allocation of public funds in a hierarchical educational system," Journal of Economic Dynamics and Control, Elsevier, vol. 28(12), pages 2485-2510, December.
  17. Caroline M. Hoxby & Andrew Leigh, 2004. "Pulled Away or Pushed Out? Explaining the Decline of Teacher Aptitude in the United States," American Economic Review, American Economic Association, vol. 94(2), pages 236-240, May.
  18. Gerhard Glomm & Michael Kaganovich, 2003. "Distributional Effects of Public Education in an Economy with Public Pensions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(3), pages 917-937, 08.
  19. repec:oup:qjecon:v:111:y:1996:i:3:p:671-718 is not listed on IDEAS
  20. Robert Tamura, 2001. "Teachers, Growth, and Convergence," Journal of Political Economy, University of Chicago Press, vol. 109(5), pages 1021-1059, October.
  21. Sean P. Corcoran & William N. Evans & Robert S. Schwab, 2002. "Changing Labor Market Opportunities for Women and the Quality of Teachers 1957-1992," NBER Working Papers 9180, National Bureau of Economic Research, Inc.
  22. Oded Galor & Omer Moav, 1998. "Ability Biased Technological Transition, Wage Inequality, and Economic Growth," Working Papers 98-14, Brown University, Department of Economics.
  23. Dan Goldhaber & Emily Anthony, 2007. "Can Teacher Quality Be Effectively Assessed? National Board Certification as a Signal of Effective Teaching," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 134-150, February.
  24. repec:oup:qjecon:v:113:y:1998:i:4:p:1055-1089 is not listed on IDEAS
  25. Betts, Julian R, 1998. "The Impact of Educational Standards on the Level and Distribution of Earnings," American Economic Review, American Economic Association, vol. 88(1), pages 266-75, March.
  26. repec:oup:qjecon:v:114:y:1999:i:2:p:533-575 is not listed on IDEAS
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