Raising starting pay buys smarter teachers

A couple of months ago, Chris Ryan and 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, would raising 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
Andrew Leigh
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 Australia’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 that 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.

Update: Some discussion in the Australian (and again), the West Australian, and the Daily Telegraph.

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2 Responses to Raising starting pay buys smarter teachers

  1. Pingback: CoreEcon » Blog Archive » Educator quality and pay

  2. Kevin Cox says:

    Given that you want to have teachers of higher ability raising the starting pay of beginning teachers is a better idea than creating differentials in teachers pay through the introduction of merit criteria. Unfortunately I fear that differential merit approach may appeal more to the bean counters because it may appear to offer better teachers at a lower total overall cost but with unfortunate side effects on outcomes which are not visible for some time.

    Keep following the path of increasing the salaries of all teachers and you have my support.

    What would be interesting to see would be the value add of “administration” to overall outcomes. My guess is that reducing the cost of non teaching activities will increase the effectivness of educational institutions. I have a gut feeling that the higher proportion of non teaching costs an institution has the lower the quality and effectivness of the teaching and the lower the overall quality of outcomes.

    Is there any such study?

    If this gut feeling has any basis of fact then perhaps we should be thinking of ways of bringing some competition to administrative functions. Perhaps we will get more bang for our bucks if we build a system where admin functions including the whole heirarchy of control is subjected to competitive pressures.

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