Draft – Not for quotation or attribution What Do Teachers Want, and Does It Matter? Job Satisfaction and Employee Performance1

This paper uses a nationally representative school and teacher survey from Indonesia to jointly investigate the determinants of a teacher’s satisfaction level and its impacts on performance. First, we establish some stylized facts about satisfaction, showing that satisfaction with salary is systematically lower (and different) than satisfaction with other aspects of job performance. Second, we show that the strongest predictors of higher satisfaction are employment status (with civil servants having higher satisfaction) and proximity of educational/cultural amenities, while multigrade teaching enters significantly with opposing signs for different measures of satisfaction. Third, analysis using an IV probit model shows that teachers’ satisfaction with their salary and work environment has a strong and significant impact on a key performance measure: the teacher’s school attendance. Moreover, the effect is large: reducing the teacher’s satisfaction with salary from “satisfied” to “indifferent” doubles the predicted teacher absence rate to nearly 40 percent. Finally, certain policy variables (such as greater job security for teachers) appear to reduce teacher absence only indirectly through satisfaction, while others (such as teacher-recognition programs) have an independent effect on absence, presumably by providing incentives at the margin.