Do higher salaries yield better teachers and better student outcomes?

Abstract

We study the effects of a policy aimed at attracting more experienced and better qualified teachers in primary schools in disadvantaged neighborhoods in Uruguay. Teachers in these schools could earn higher salaries, and more experienced teachers are given priority in choosing teaching positions. Eligibility for the program was based on a poverty index with a cutoff rule. Estimates from regression discontinuity models show that the policy successfully led to ‘hiring experience from other schools’, and also increased tenure. Overall, the effect on student outcomes was small. We rationalize this result by showing that the program may have increased experience in ways that are not strongly associated with improved student outcomes. Consistent with this, we do find achievement gains for students in schools that saw a reduction in the share of very inexperienced teachers. The results underscore that increases in teacher pay may only improve student outcomes if it increases those teacher characteristics that actually improve student outcomes.