Nber Working Paper Series Would Higher Salaries Keep Teachers in High-poverty Schools? Evidence from a Policy Intervention in North Carolina

For a three-year time period beginning in 2001, North Carolina awarded an annual bonus of $1,800 to certified math, science and special education teachers working in high poverty or academically failing public secondary schools. Using longitudinal data on teachers, we estimate hazard models that identify the impact of this differential pay by comparing turnover patterns before and after the program’s implementation, across eligible and ineligible categories of teachers, and across eligible and barely-ineligible schools. Results suggest that this bonus payment was sufficient to reduce mean turnover rates of the targeted teachers by 12%. Experienced teachers exhibited the strongest response to the program. Finally, the effect of the program may have been at least partly undermined by the state’s failure to fully educate teachers regarding the eligibility criteria. Our estimates most likely underpredict the potential outcome of a program of permanent salary differentials operating under complete information. Charles T. Clotfelter 214A Terry Sanford Institute Duke University Box 90245 Durham, NC 27708 and NBER [email protected] Elizabeth Glennie North Carolina Education Research Data Center Duke University Box 90545 Durham, NC 27708-0545 [email protected] Helen F. Ladd 214A Terry Sanford Institute Duke University Box 90245 Durham, NC 27708 [email protected] Jacob L. Vigdor Terry Sanford Institute of Public Policy Duke University Box 90312 Durham, NC 27708 and NBER [email protected] The twin topics of teacher quality and teacher compensation have garnered considerable attention from researchers and policy-makers in recent years. This attention has been motivated in part by the desire to increase the quality of individuals who select into the teaching profession, and to prevent attrition from culling the most qualified individuals from the ranks of teachers (Corcoran, Evans and Schwab 2004; Hoxby and Leigh 2004). A second motivation has been concern about the uneven distribution of effective teachers across schools. Numerous studies have documented the tendency for the most qualified teachers to gravitate toward schools that serve relatively well-off children, even though salaries are often no higher in such schools (Lankford, Loeb and Wyckoff 2002; Scafidi, Sjoquist and Stinebrickner 2002; Hanushek, Kain and Rivkin 2004; Reed, Rueben and Barbour 2006). As states and local districts feel increasing pressure to comply with the No Child Left Behind Act’s mandate that each classroom contain a “highly qualified” teacher, evidence on policy interventions that successfully recruit outstanding candidates and distribute them equitably becomes more and more valuable. One obvious policy tool to deal with the quality and distribution of teachers would be to increase teachers’ monetary compensation, perhaps in a targeted way. As straightforward as that suggestion might seem, however, a large and growing body of evidence suggests that the power of higher salaries to attract better teachers to the profession is limited (Hanushek, Kain and Rivkin, 1999; Loeb and Page 2000), and that offering teachers pay differentials to take jobs in low-performing schools is not a cost-effective means of improving test scores, particularly when the pay differential consists of a one-time signing bonus rather than a permanent salary increase (Fowler, 2003). Signing bonuses, absent other contractual provisions, may influence the attraction of teachers to schools but offer no incentive for teachers to stay once they have arrived.