Abstract
This paper examines how the removal of national pay scales, a common feature of public sector labor markets, affects productivity. We exploit a reform that compelled all schools in England to replace pay scales with school-designed performance related pay schemes. Using teacher-level data, we find that in response to the reform, schools in labor markets with better outside options for teachers have relatively higher teacher pay progression, spending on teachers, teacher retention and student performance. These effects are largest for schools with a more disadvantaged demographic. We conclude that centralized pay scales result in a misallocation of resources by preventing such schools from retaining their teachers.
Original language | English |
---|---|
Article number | 102253 |
Journal | Economics of Education Review |
Volume | 88 |
Early online date | 21 Mar 2022 |
DOIs | |
Publication status | Published - 1 Jun 2022 |
Bibliographical note
Funding Information:This project derives from work commissioned by the Department for Education to evaluate the impact of the national teacher pay reforms, which we conducted with the National Foundation for Educational Research. Our thanks are due to the project Steering Group for their advice during that process and to the Department for Education for commissioning the work and granting access to the longitudinal School Workforce Census dataset. We would like to thank Sandra Black, Andrew Barr, Steve Trejo, Hans Sievertsen, Anna Vignoles and Yanos Zylberberg for their advice. Neither NFER nor the Department for Education bear any responsibility for any findings reported here.
Publisher Copyright:
© 2022
Keywords
- Pay Scales
- Teachers
- Performance Related Pay
- Productivity