Teacher mobility responses to wage changes: Evidence from a quasi-natural experiment

This paper utilizes a Norwegian experiment with exogenous wage changes to study teacher’s turnover decisions. Within a completely centralized wage setting system, teachers in schools with a high degree of teacher vacancies in the past got a wage premium of about 10 percent during the period 1993-94 to 2002-03. The empirical strategy exploits that several schools switched status during the empirical period. In a fixed effects framework, I find that the wage premium reduces the probability of voluntary quits by six percentage points, which implies a short run labor supply elasticity of about 11⁄4 .