Contract Teachers and Student Achievement in Rural China: Evidence from Class Fixed Events

Education is widely considered to be the most important form of human capital, especially in less developed countries where the rates of return are generally high for all individuals, including for agricultural producers. However, for schooling to play an important role, the system of education needs to provide quality education, which among other things requires high quality teachers. Unfortunately, in many developing countries there are dramatic differences in the quality of teachers and their effectiveness. Facing fiscal constraints and growing enrollments, school systems in developing countries often supplement their teaching staff by hiring contract teachers – teachers hired on fixed-term contracts with considerably lower salaries than civil service teachers. Currently, however, there is limited evidence on how the effectiveness of these teachers compares to that of civil service teachers. We use a dataset from rural primary schools in western China to estimate the causal effect of contract teachers on student achievement. Using a valueadded, cross-subject, fixed-effect approach to address potential bias arising from the sorting of teachers across and within schools, we find that gains in student scores on standardized exams in math and Chinese are 0.13 standard deviations less in classes taught by contract teachers than in classes taught by civil service teachers.