Thursday, May 31, 2012

What would happen if we increase teacher wages from $65,000 to $150,000?

In today's Washington Post, there is an article on teacher unions (click on link to go to article) and how they operate differently in other countries.  The article mentions that many nations with the highest student achievement ( Finland, Singapore, South Korea) are heavily unionized, so it may be the case that teacher unions don't necessarily cripple an education system.

The author then proposes an interesting idea, which is to increase teacher starting pay from an average of $65,000 to $150,000.  I think the author believes that this will somehow change the relationship between teacher unions and the educational system.  I don't know.  Maybe it will, and maybe it won't.

Anyway, I thought it would be interesting to look at the evidence for increasing teacher wages on student achievement.

The basic argument for why increasing salaries will increase student achievement is that with higher salaries school districts will be able to attract (on average) higher quality people into the teaching profession.  Better teachers will lead to better student outcomes.

This is an economics blog, so here is a diagram.

There are two papers that I jumped to when thinking about this question.  The first is a 1995 JHR paper by Ballou & Podgursky.  The other is a 2000 REStat paper by Loeb & Page.  Both are a little old, so if someone has some good recent papers, let me know.

Ballou & Podgursky model three things:  the decision to train for a teaching career in college, the decision to seek a teaching career after college, and the decision to continue teaching each year.  Their insight is that increasing salaries for teachers keeps teachers already in the profession in for longer.  This can actually crowd out new teachers from entering the profession.  This is bad if you want to increase overall teacher quality in the profession, since the old (bad?) teachers stick around for longer.  The other insight is that it can take a long time (decades?) for the old to be replaced by the new better teachers, and that the size of the change depends on how well school districts are able or want to pick the best talent.

Loeb & Page look empirically at what happens when salaries increase for teachers.  They use state-level panel data and look at teacher wages relative to other professions teachers could enter.  They find that increasing teacher salaries by 10% today reduces high school dropout rates somewhere between 3% and 6% (percent not percentage points) 10 years later.

This gets us closer to the original question.  It's hard to say exactly what effect going from $65,000 to $150,000 (we are talking about a 131% increase not a 10% increase) will have on achievement.  You can't take that 3-6% number too literally, since at some point the model would predict a negative dropout rate, which is impossible, but the point is that increasing teacher salaries to attract better talent does seem to have an effect. 

To conclude, I am not exactly sure how big of an effect going from salaries of $65,000 to $150,000 would produce.  It would probably be a pretty large effect, but it might take a long time to reap the fruits.

First Post

This blog is mostly going to focus on economics and education policy issues. 

I am an economics PhD student at Michigan State university, and I have mostly worked on teacher value-added (using student test scores to evaluate teachers).  I will probably post a lot of stuff on that, but I am actually looking to branch out and get into more classic labor economics and economics of education issues. 

I have this crazy idea that starting a blog about current issues and policy will help me do that.  We will see.