How Should School Districts Shape Teacher Salary Schedules? Linking School Performance to Pay Structure in Traditional Compensation Schemes

Abstract

This study examines the relative distribution of salary schedule returns to experience for beginning and veteran teachers. We argue that districts are likely to benefit from structuring salary schedules with greater experience returns early in the teaching career. To test this hypothesis, we match salary data to school-level student performance data on math and reading achievement tests across states. We find that frontloaded compensation schemes—those that allocate greater salary returns to experience to novice teachers—are associated with better performance in multiple grades and throughout the achievement distribution. Our results contribute to national debates concerning teacher compensation policies.