Would Higher Salaries Keep Teachers in High-Poverty Schools?

Teachers who received bonus payments were ten percent less likely to depart at the end of the school year than other teachers at the same school.

The Federal No Child Left Behind Act mandates that every classroom in the United States be led by a "highly effective" teacher. Shortages of such teachers most commonly occur in schools serving very poor students, and in subject areas such as math and science, where highly qualified teachers can easily find work in other industries. Basic economics suggests that the easiest way to eliminate a shortage in a labor market is to increase wages. Yet the concept of offering higher salaries to teachers in certain subject areas, or in the most disadvantaged schools within a district, is relatively novel in the United States. And since these policies are infrequently implemented, few if any evaluations have been conducted to determine the effectiveness of money as a tool for convincing teachers to take jobs that they would not otherwise consider.

Beginning in 2001, North Carolina amended its teacher compensation schedule to award an annual $1,800 bonus to science, math, and special education teachers working in high poverty or academically struggling public secondary schools. The program lasted for three years. In Would Higher Salaries Keep Teachers in High-Poverty Schools? Evidence from a Policy Intervention in North Carolina (NBER Working Paper No. 12285), authors Charles Clotfelter, Elizabeth Glennie, Helen Ladd, and Jacob Vigdor use administrative payroll data from North Carolina schools to estimate whether the bonuses affected teachers' decisions to quit working at a particular school. They find that the bonus program reduced turnover rates for more experienced teachers. Other studies suggest that experience is positively associated with student achievement.

Overall, the North Carolina data suggest that teachers who received bonus payments were "ten percent less likely to depart at the end of the school year" than other teachers at the same school. As a rough rule of thumb, the authors calculate that their data show that "a $100 increase in the bonus reduces the probability of departure by approximately 1 percent."

The response varied with certain teacher characteristics. High school teachers were apparently unaffected by the program. Middle school teachers, who had a higher likelihood of departure than high school teachers, were strongly affected. Middle school teachers receiving a bonus payment were 27 percent less likely to leave. Math teachers receiving the bonus were "18 percent less likely to depart the following year."

This study probably underestimates the effects of bonuses on departure rates because teachers were not well informed about the provisions of the program, they were skeptical that the program would remain in place, and the program in fact ended prematurely. Despite these programmatic shortcomings, the authors conclude that it "provides an important example of a type of reform that deserves more attention" and that it "bodes well for programs designed to target permanent salary differentials to certain types of teachers in needy schools.

-- Linda Gorman