Teacher Quality Policy When Supply Matters
American Economic Review
vol. 105,
no. 1, January 2015
(pp. 100-130)
Abstract
Teacher contracts that condition pay and retention on demonstrated performance can improve selection into and out of teaching. I study alternative contracts in a simulated teacher labor market that incorporates dynamic self-selection and Bayesian learning. Bonus policies create only modest incentives and thus have small effects on selection. Reductions in tenure rates can have larger effects, but must be accompanied by substantial salary increases; elimination of tenure confers little additional benefit unless firing rates are extremely high. Benefits of both bonus and tenure policies exceed costs, though optimal policies are sensitive to labor market parameters about which little is known. (JEL I21, J22, J23, J24, J31, J41, J45)Citation
Rothstein, Jesse. 2015. "Teacher Quality Policy When Supply Matters." American Economic Review, 105 (1): 100-130. DOI: 10.1257/aer.20121242Additional Materials
JEL Classification
- I21 Analysis of Education
- J22 Time Allocation and Labor Supply
- J23 Labor Demand
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 Wage Level and Structure; Wage Differentials
- J41 Labor Contracts
- J45 Public Sector Labor Markets