Smaller Class, Thinner Wallet

The Australian Education Union today begins another campaign to bring class sizes down to 20. As Justin Wolfers and I argued in 2002, in response to a surprising similar "twenty is plenty" campaign, the Bracks Government (which seems to be the main target) would do well to ignore the campaign. The econometric evidence on class size suggests that once classes get below 30, the benefits to students of further class size cuts is small or zero.

Teachers may also wonder whether such a campaign serves their best interests. I’ve been working quite a bit this month on teacher pay and teacher aptitude, and am increasingly coming to the view that declining teacher pay, relative to similar occupations, is a big reason why the aptitude of new teachers has fallen (for evidence on this point, watch this space).

Deletethis Why has relative teacher pay fallen? One possibility is that cutting class sizes chewed up a lot of the education budget. After all, a 10% class size cut costs the budget as much as a 10% salary increase. The graph on the left shows the relationship between the two. Of course, correlation doesn’t imply causation, but given the trends of the past quarter-century, I’m surprised the AEU is still pushing smaller classes.

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4 Responses to Smaller Class, Thinner Wallet

  1. Andrew – There is another possibility here, which is that teaching attracts people who don’t like working long hours – not necessarily because they are lazy, but perhaps because they want to combine work and family. All those holidays, for example. Smaller classes reduce marking time, pastoral care time etc. Of course as the AEU is also more than a little prone to stubborn ideology, regardless of evidence or logic, perhaps they are just refusing to look at the actual trade-off they are making.

  2. Andrew Leigh says:

    Andrew, I can see why teachers want smaller classes and lower wages. But my guess is that the typical teacher would prefer a 5% payrise to a 5% class size cut. Since both cost the government the same, I can imagine a situation in which the govt might prefer class sizes. But I’m having trouble figuring out why a rational union would press for class size reductions.

  3. Elliott says:

    Actually I doubt that teacher’s wage level is driven by market forces or their productivity, as presumably their wage is set by the government mainly acocrding to political (or constituency-related), not economic considerations.

    As total number of new births (as well as total fertility rate) in Australia keeps falling since the early 1990s, the government minimizes the (political) impacts by reducing class size so as to keep most teachers employed. Doing so, however, increases fiscal pressure, which may motivate the government to adjust payment to teachers.

  4. Christine says:

    The teachers unions and schools aren’t necessarily interested in getting the best teachers into the profession. They’re looking after the guys they’ve got in there now. Maybe they think that governments will spend more to get some tangible outcome (lower class sizes), but won’t spend more on salaries since it has no tangible outcome? There would then be no actual (short term?) tradeoff between class size and wages, so you go for the one benefit you can get. Perhaps not too bad an assumption? In which case, if you can argue a strong link between compensation and quality that teachers can use, then maybe the debate can be turned round?

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