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Pay for paperwork?

By Andrew Leigh - posted Thursday, 12 June 2008

It is rarely recognised, but Australia in the 1960s had two ingenious ways of keeping teacher quality high. First, rampant gender pay discrimination in the professions pushed many talented women into teaching (where gender pay gaps were generally smaller). Second, a highly regulated labour market meant that many companies rewarded their employees based on tenure, not performance - just as teaching did (and still does).

Over the past half-century, these two factors changed radically. On balance, the large-scale entry of women into business, law, and medicine has been a terrific development. But an unintended consequence is that fewer talented women now become teachers. And while the growth of performance pay has benefited many occupations, it has made the uniform salary schedules in teaching look increasingly unattractive to today’s graduates.

Although there are many talented teachers in Australia’s classrooms, there is also a growing realisation that Australia faces a crisis in teacher quality if it does not do more to attract the best into the teaching profession. But how should “best” be defined?


One simple way would be to pay a higher salary to teachers who obtain a Masters degree. If undertaking a Masters degree improves classroom performance, then this would be a no-brainer. Unfortunately, at least three US studies have found that students’ test score gains are unrelated to whether or not their teacher has a Masters degree. And my own work (PDF 796KB) - using data from Queensland primary school teachers - comes to the same conclusion. Bonus payments for teachers who obtain a Masters degree therefore seem a bad idea.

Another strategy - advocated in a report last week from the Business Council of Australia - is to establish a form of professional licensing for teachers. On its face, this strategy sounds uncontroversial. If doctors, lawyers and accountants have licensing systems, surely a teacher accreditation hurdle must be good?

Yet what is often missed is that accreditation systems have two effects: they impose a quality bar, but because they are time-consuming, they also act as an entry barrier, deterring some talented people from entering the profession. Since these two effects go in opposite directions, it is theoretically possible for accreditation systems to raise, lower, or have no effect on quality. Indeed, studies that have looked at the impact of stricter licensing regimes for doctors and dentists find no evidence that they benefit consumers (although they do appear to raise wages).

The accreditation system proposed in the BCA report is modelled on the National Board for Professional Teaching Standards, which has accredited about 2 per cent of US teachers. Yet it omits to mention that the typical NBPTS applicant devotes a whopping 357 hours (PDF 3.32MB) to preparing an application.

Given that one of the chief complaints of Australian teachers is excessive paperwork, this potential discouragement effect should not be underestimated. Consistent with this, economists Joshua Angrist and Jonathan Guryan found that US states which implemented a teacher certification system did not raise the academic standards of new teachers.

Given the drawbacks of pay-for-credentials schemes, a natural alternative is to consider pay-for-performance, in which the best teachers are identified by their principals, school inspectors, or through some objective measure such as student test score gains.


Radical as this sounds to teachers’ ears, such an approach would be pretty similar to the way that salaries are determined for most workers (including state and federal bureaucrats). And while merit pay could theoretically have undesirable effects (breaking down staffroom camaraderie; encouraging teaching to the test; tempting teachers to cheat), the evidence from places as diverse as Israel, India and the US suggests that the advantages outweigh the disadvantages.

But don’t take my word for it. If we want to know the best way to identify the best teachers, let’s run a series of randomised trials: pitting the current system against various alternatives to see which one comes out on top. In the same way that we test new drugs before putting them on pharmacy shelves, we ought to be sure that strategies to attract and keep talented teachers actually work before rolling them out nationwide.

Looking back at the fall in teacher quality should give us some modesty about our ability to predict the future. In the 1960s, few would have predicted that less gender pay discrimination and more inequality would lower teacher quality. If the goal of policy is to boost teacher quality in the coming decades, let’s make sure it’s underpinned by the best evidence we can muster.

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This article was originally published in the Australian Financial Review on June 3, 2008.

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About the Author

Andrew Leigh is the member for Fraser (ACT). Prior to his election in 2010, he was a professor in the Research School of Economics at the Australian National University, and has previously worked as associate to Justice Michael Kirby of the High Court of Australia, a lawyer for Clifford Chance (London), and a researcher for the Progressive Policy Institute (Washington DC). He holds a PhD from Harvard University and has published three books and over 50 journal articles. His books include Disconnected (2010), Battlers and Billionaires (2013) and The Economics of Just About Everything (2014).

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