Preferences, Selection, and the Structure of Teacher Compensation
103 Pages Posted: 9 Mar 2020 Last revised: 23 Mar 2021
Date Written: February 14, 2020
Human capital shapes income, inequality, and growth. In the public sphere, human-capital formation depends largely on the selection and retention of teachers. To understand selection and retention, I use a discrete-choice experiment to estimate teacher preferences for compensation structure, working conditions, and contracts. High-performing teachers have stronger preferences for schools offering performance pay, which implies it promotes positive selection. Under a variety of school objectives, schools appear to underpay in salary and performance pay while overpaying in retirement. The results suggest significant efficiency gains from restructuring compensation: teacher welfare and student achievement can be simultaneously improved.
Keywords: Teachers, Labor Markets, Compensation, Salaries, Pensions, Pay-for-performance, Teacher Selection,Teacher Retention, Class Size
JEL Classification: I20, J32, J45, M50
Suggested Citation: Suggested Citation