If You Pay Peanuts Do You Get Monkeys? A Cross-Country Analysis of Teacher Pay and Pupil Performance

Why are teachers paid up to four times as much in some countries compared to others and does it matter? Specifically, is the quality of teachers likely to be higher if they are paid higher up the income distribution in their own country, and are pupil outcomes influenced by how well their teachers are paid? This paper considers the determinants of teachers' salaries across countries and examines the relationship between the real (and relative) level of teacher remuneration and the (internationally) comparable measured performance of secondary school pupils. We use aggregate panel data on 39 countries published by the OECD to model this association. Our results suggest that recruiting higher ability individuals into teaching and permitting scope for quicker salary advancement will have a positive effect on pupil outcomes.