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Preferences, Selection, and the Structure of Teacher Pay

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  • Andrew C. Johnston

Abstract

I examine teacher preferences using a discrete-choice experiment, which I link to administrative data on teacher effectiveness. I estimate willingness-to-pay for a rich set of compensation elements and working conditions. Highly effective teachers usually have the same preferences as their peers, but they have stronger preferences for performance pay. I use the preference estimates to investigate the optimal compensation structure for three key objectives: maximizing teacher utility, maximizing teacher retention, and maximizing student achievement. Under each objective, schools underutilize salary and performance pay, while overutilizing retirement benefits. Restructuring compensation can significantly improve both teacher welfare and student achievement.

Suggested Citation

  • Andrew C. Johnston, 2024. "Preferences, Selection, and the Structure of Teacher Pay," NBER Working Papers 33088, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:33088
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    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
    • M50 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - General

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