Towards an Optimal Teacher Salary Schedule: Designing Base Salary to Attract and Retain Effective Teachers

Abstract

This study presents the literature’s first estimates of the effect of teacher pay on the distribution of experience among teachers hired by public school districts. Overall, a 1% increase in base salary for teachers of a particular experience level increases the proportion of the targeted teachers hired by 0.04–0.08 percentage points. Pay increases have the largest effect on hire rates among teachers with 2–3 years of experience and the effect diminishes with experience. I show that higher teacher salaries provide a dual benefit of retaining and attracting a more effective distribution of teachers. Districts may also improve student achievement growth at no cost by reshaping their salary schedules so that they are increasing and concave in teacher experience.