Teacher Mobility Responses to Wage Changes: Evidence from a Quasi-Natural Experiment

Abstract

This paper utilizes a Norwegian experiment with exogenous wage changes to study teacher's turnover decisions. Within a completely centralized wage setting system, teachers in schools with a high degree of teacher vacancies in the past got a wage premium of about 10 percent during the period 1993-94 to 2002-03. The empirical strategy exploits that several schools switched status during the empirical period. In a fixed effects framework, the wage premium reduces the probability to quit by 6-7 percentage points and increases recruitment by 4-7 percentage points.

Fairness and Frictions: The Impact of Unequal Raises on Quit Behavior

“…17 To gain power when estimating the discontinuities in quit rates, we use a parametric framework and pool data from the 1996 and 1997 raises. In particular, we estimate models of the form:…”

“…3 ventions, and have found elasticities ranging from -2 or -3 (Ransom and Sims 2010;Falch 2011) to -9 (Mas 2014). 6 Again, a major challenge in this literature is the endogeneity of wages, and the di erence in estimates may be partly due to di erent strategies for addressing this issue.…”

Local labor markets and taste-based discrimination

“…Booth and Katic (2011) estimate labor supply elasticity around 0.7 in Australia, confirming monopsony power existence. Falch (2011) points out monopsony in Norway concerning teachers. Barth and DaleOlsen (2009) indicate that 70-90 % of the gender wage gap among low-skilled workers is explained by monopsonistic discrimination.…”

Nordic Economic Policy Review

“…The evidence clearly indicates that schools that increase the wage improve their recruitment of teachers. For Norway, Falch (2010Falch ( , 2011) exploits a system with wage bonuses in the three northernmost counties during the 1990's, and finds that the supply elasticity faced by individual schools is in the range 1.0-1.9. Clotfelter et al (2008) investigate a similar bonus system in North Carolina, and find an effect of similar size.…”

“…This is an argument for flexibility in wage setting at the school level to the extent that teacher supply varies across schools. In fact, the interventions investigated by Falch (2010Falch ( , 2011 and Clotfelter et al (2008) were motivated by teacher shortages. By allowing wages to vary across schools, one should, in principle, achieve a larger wage variation of the form that Jackson's paper argues for.…”