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Premium or Penalty? Labor Market Returns to Novice Public Sector Teachers

Author

Listed:
  • Juan Esteban Saavedra
  • Dario Maldonado
  • Lucrecia Santibañez
  • Luis Omar Herrera-Prada

Abstract

Countries spend education budgets primarily on teacher payroll. An unresolved debate on whether teachers earn a premium or a penalty relative to other occupations complicates teacher compensation decisions. A national screening exam in Colombia and administrative data show that teaching candidates scoring above the passing cutoff have greater annual earnings early in their tenure than those below the cutoff. Extension of regression discontinuity methods away from the cutoff indicate similarly attractive earnings premia for high-scoring applicants. Despite sizeable earnings premia, teachers hold outside jobs, and teaching does not attract top college graduates, underscoring challenges to improving education solely through teacher compensation.

Suggested Citation

  • Juan Esteban Saavedra & Dario Maldonado & Lucrecia Santibañez & Luis Omar Herrera-Prada, 2025. "Premium or Penalty? Labor Market Returns to Novice Public Sector Teachers," Journal of Human Resources, University of Wisconsin Press, vol. 60(2), pages 538-577.
    • Handle: RePEc:uwp:jhriss:v:60:y:2025:i:2:p:538-577
    Note: DOI: https://doi.org/10.3368/jhr.0620-10971R1
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    File URL: http://jhr.uwpress.org/cgi/reprint/60/2/538
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    More about this item

    JEL classification:

    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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