Teacher Labor Market Equilibrium and Student Achievement

105 Pages Posted: 3 Feb 2022 Last revised: 9 Jun 2022

See all articles by Michael Bates

Michael Bates

University of California, Riverside (UCR)

Michael Dinerstein

University of Chicago

Andrew C. Johnston

University of California, Merced - Department of Economics

Isaac Sorkin

Stanford University - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: Januaryr 31, 2022

Abstract

We study the equity and efficiency consequences of the allocation of teachers to schools. Within a district, wages are uniform across potential assignments, which may lead to inequity among students—because teachers prefer schools with more advantaged students—and inefficient allocations—because teachers are not compensated for match effects. While we do observe inefficient allocations (there are meaningful gains from reallocation), surprisingly, we do not observe inequity: advantaged and disadvantaged students have teachers with similar value-added. To understand why uniform wages lead to inefficiency but not inequity, we use rich data from the teacher transfer system linked to test score data to estimate an equilibrium model of the teacher labor market. We find that the allocation is equitable because principals hire noisily, tending not to select their most effective applicants. Achieving most efficiency gains, however, requires differentiated wages that compensate teachers for match output.

Suggested Citation

Bates, Michael and Dinerstein, Michael and Johnston, Andrew C. and Sorkin, Isaac, Teacher Labor Market Equilibrium and Student Achievement (Januaryr 31, 2022). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2022-23, Available at SSRN: https://ssrn.com/abstract=4024626 or http://dx.doi.org/10.2139/ssrn.4024626

Michael Bates

University of California, Riverside (UCR) ( email )

900 University Avenue
Riverside, CA 92521
United States

Michael Dinerstein (Contact Author)

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

HOME PAGE: http://https://sites.google.com/site/michaeldinerstein/

Andrew C. Johnston

University of California, Merced - Department of Economics ( email )

P.O. Box 2039
Merced, CA 95344
United States

Isaac Sorkin

Stanford University - Department of Economics ( email )

Landau Economics Building
579 Serra Mall
STANFORD, CA 94305-6072
United States

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