Monday, October 28, 2024

Preferences, Selection, and the Structure of Teacher Pay

The author of this report examines teacher preferences estimating 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. 

The author uses 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.

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