Regulatory arbitrage in teacher hiring and retention: Evidence from Massachusetts Charter Schools

Abstract

We study personnel flexibility in charter schools by exploring how teacher retention varies with teacher quality in Massachusetts. We propose a model in which educators with high fixed-costs use charter schools to explore teaching careers before obtaining licenses required for higher paying public sector jobs. A key implication of the theoretical model is that charter schools create positive externalities for traditional public schools by increasing the average quality of available teacher labor. Empirical results show patterns consistent with the model. In particular, we show that charters are more likely to lose their highest and lowest value-added teachers. Low performers tend to exit public education, while high performers tend to switch to traditional public schools.