The Determinants of Teachers' Occupational Choice

38 Pages Posted: 6 Aug 2018

See all articles by Kevin Lang

Kevin Lang

Boston University - Department of Economics; National Bureau of Economic Research (NBER)

Maria Dolores Palacios

Boston University

Date Written: August 2018

Abstract

Among college graduates, teachers have both low average AFQT and high average risk aversion, perhaps because the compression of earnings within teaching attracts relatively risk-averse individuals. Using a dynamic optimization model with unobserved heterogeneity, we show that were it possible to make teacher compensation mimic the return to skills and riskiness of the non-teaching sector, overall compensation in teaching would increase. Moreover, this would make many current teachers substantially worse off, making reform challenging. Importantly, our conclusions are sensitive to the degree of heterogeneity for which we allow. Since even a model with no unobserved heterogeneity fits well within sample, one could easily conclude that allowing for two or three types fits the data adequately. Formal methods reject this conclusion. The BIC favors seven types. Ranking models using cross-validation, nine types is better although the improvements of going from six to seven, from seven to eight and from eight to nine types are noticeably smaller than those from adding an additional type to a lower base.

Suggested Citation

Lang, Kevin and Palacios, Maria Dolores, The Determinants of Teachers' Occupational Choice (August 2018). NBER Working Paper No. w24883, Available at SSRN: https://ssrn.com/abstract=3226813

Kevin Lang (Contact Author)

Boston University - Department of Economics ( email )

270 Bay State Road
Boston, MA 02215
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National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
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Maria Dolores Palacios

Boston University

595 Commonwealth Avenue
Boston, MA 02215
United States

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