Chapter 30 - Compensating differentials in teacher labor markets

Abstract

In reviewing empirical teacher labor market literature across: compensating wage differentials, teacher retention, and policy intervention, we find several emerging patterns. Empirical literature on compensating wage differentials point out that there are positive compensating wage differentials for teaching in schools with higher minority enrollment. That magnitude ranges from a few percentage points to 14 percentage points. There is no consensus on whether there is a compensating wage differential for teaching in schools with higher share of free and reduced lunch students. From teacher retention studies, those previous studies collectively indicate that there is a positive wage differential for teaching in both high minority and low-income schools. From quasi-experimental policy intervention studies, we find that the labor supply elasticity ranges from slightly larger than one to 4.30. Using evidence from a recent random assignment experiment, we find suggestive evidence that we need close to $7,000 as combat pay to attract and retain teachers in schools with high share of minority and low-income students.