A couple of months ago, Chris Ryan andÂ I put out a paper showing that there had been a decline in the literacy and numeracy standards of new teachers over the period 1983-2003. This led to some discussion about what reforms might redress the problem. For example, wouldÂ raisingÂ the starting pay of new teachers help?
In a paper out today, I try to answer that question. The idea is to look at what happens to the entrance scores of those in teacher education courses when a state or territory boosts the starting salary for new teachers.
Teacher Pay and Teacher Aptitude
Can changes in teacher pay encourage more able individuals to enter the teaching profession? So far, studies of the impact of pay on the aptitude distribution of teachers have provided mixed evidence on the extent to which altering teacher salaries represents a feasible solution to the teacher quality problem. One possible reason is that these studies have been unable to separate labor supply effects from labor demand effects. To address this, I model the relationship between current salaries and the academic aptitude of future teachers (those entering teacher education courses). Using a unique dataset of test scores for every individual admitted into an Australian university between 1989 and 2003, I explore how changes in average pay or pay dispersion affect the decision to enter teacher education courses in Australiaâ€™s eight states and territories. A 1 percent rise in the salary of a starting teacher boosts the average aptitude of students entering teacher education courses by 0.6 percentile ranks, with the effect being strongest for those at the median. This result is robust to instrumenting for teacher pay using uniform salary schedules for public schools. I also find some evidence that pay dispersion in the non-teaching sector affects the aptitude of potential teachers.
In my data, the typical teacher education student was at the 39th percentile within his/her university. These results suggest thatÂ a 10 percent increase in starting teacher pay (holding other graduate salaries constant) would raise the typical teacher education student to the 45th percentile of the aptitude distribution.