Effect of Teacher Pay on Student Performance: Findings from Illinois

This product is part of the RAND Education working paper series. RAND working papers are intended to share researchers' latest findings and to solicit additional peer review. This paper has been peer reviewed but not edited. Unless otherwise indicated, working papers can be quoted and cited without permission of the author, provided the source is clearly referred to as a working paper. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors. is a registered trademark. iii PREFACE There is increasing concern about the performance of students and the quality of the teachers in our nation's schools. Higher teacher pay (linked to accountability) has been put forward as one of the ways of attracting and retaining high-quality teachers, but direct evidence of whether higher teacher pay results in improved student outcomes has been sparse. Illinois offers a unique opportunity to examine the effect of teacher pay on student performance at the district level for two reasons: (a) some districts are split districts encompassing either elementary and middle schools or high schools only; and (b) salaries differ significantly by district type. This paper uses data on Illinois districts from 1995-1998 to explore differences in teacher pay and to examine the effect of teacher pay on district test scores, controlling for other district student and teacher characteristics. The results, while based on exploratory analyses, should be of interest to education researchers and policymakers at the national, state, and local levels who are struggling with issues of teacher quality and improving learning for all students. drafts and provided helpful comments on methodology and substance. The paper benefited greatly from their input. to bring accurate data and careful, objective analysis to the national debate on education policy.