New Evidence on Teacher Pay

Abstract

Prior research has shown that teachers receive lower pay compared to people with the same educational level who work in other occupations. This article challenges that literature and shows that by applying novel statistical approaches, the pay differentials are reduced, and even become pay premiums. In particular, these approaches provide unifying estimates that turn an earnings penalty between female teachers and non-teachers of approximately 10%—based on a standard approach in the literature—into an earnings premium of 5 to 10%. Likewise, estimates based on these approaches erase up to two-thirds of the earnings gap between male teachers and non-teachers. Moreover, going beyond the traditional focus on the mean, the author decomposes the pay gap across the entire earnings distribution. Estimates show that although teachers have a substantial earnings premium at the bottom of the distribution, they have a large earnings penalty at the top.