How Much Do Teachers Earn?

Abstract

In the continuing debate over how to improve education systems, many people argue that teachers' salaries need to be increased. Nevertheless, there is very little reliable information on how much teachers actually earn, how well they fare relative to the labor market and the general distribution of income, and how the pay structure affects the recruitment, retention and motivation of teachers. This paper seeks to establish a reliable method for analyzing how much teachers earn using standard and accepted methods of labor market analysis, and applying them to the case of Bolivia. We break the question of How much do teachers earn? into three distinct parts. The first part shows that teachers' monthly incomes are less on average than the rest of the labor market, but that their hourly earnings are higher. An econometric analysis of household survey data shows that, after controlling for personal characteristics, teachers hourly earnings are still higher than they would earn in the private sector, but lower than they would earn in other unionized public sector jobs. Non-salary benefits are shown to provide teachers with further advantages over the private sector labor market. Next, we show that teachers are relatively well off in the overall distribution of income after incorporating other sources of income and life choices (i.e., second jobs, hours worked, second wage earners). We demonstrate that teachers are not apparently forced to take second jobs since they are less likely than other workers to take second jobs, and when they do, the hourly earnings in those jobs is higher than their teaching jobs. The final section of the paper discusses the implications of these findings for policies to improve recruitment, retention, and motivation of high quality teachers.