Teacher Pay and Teacher Quality

Can changes in teacher pay encourage more able individuals to enter the teaching profession? So far, studies of the impact of pay on the aptitude distribution of teachers have provided mixed evidence on the extent to which altering teacher salaries represents a feasible solution to the teacher quality problem. Using a unique dataset of test scores for everyone admitted into an Australian university between 1989 and 2003, I explore how changes in average pay or pay dispersion affect the decision to enter teacher education courses in the eight states and territories that make up Australia. A 1% rise in average teacher pay boosts the average aptitude of students entering teacher education courses by 0.8 percentile ranks, with the effect being strongest for those just above the median. I find some evidence that higher pay variance in teaching also boosts the aptitude of potential teachers. * Thanks to seminar participants at the Australian National University for helpful comments and suggestions. I am grateful to Aleks Alimpijevic and Fiona Sutherland for assistance in obtaining the tertiary entrance data used in this study. All errors are mine. Leigh: Teacher Pay and Teacher Quality 2