Working Papers
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The Labor Market for Teachers Under Different Pay Schemes [SSRN] (under review)
[previously circulated as "Unions, Salaries, and The Market for Teachers"] NBER Working Paper n. 24813 2016 NAEd/Spencer Dissertation Fellowship; Selected "Best Applied Paper" during the Econometric Society European Summer Meeting 2016 Policy brief: Cato Institute Press coverage: Wall Street Journal (1/31/2017, 10/11/2018, 2/14/2019) Compensation of most US public school teachers is rigid and determined solely on the basis of seniority. This paper examines the effects of a major change in laws regulating teacher salaries. In 2011, the State of Wisconsin's Act 10 gave school districts full authority to design their own independent compensation schemes for teachers. Newly collected data on district-level policies show that roughly half of all districts retained seniority-based schedules, whereas the other half switched to flexible compensation and started paying high-quality teachers more. Teacher quality (measured using test scores) increased by 0.05 standard deviations in districts with flexible pay relative to those that retained the rigid compensation structure. This change was driven primarily by high-quality teachers moving into flexible-pay districts and low-quality teachers leaving these districts. Teachers' effort also increased by 0.07 standard deviations in flexible-pay districts compared with seniority-pay districts. Simulations based on a structural model of this labor market show that the introduction of individual salaries in all districts (as opposed to just a few) is associated with a smaller improvement in teacher quality, entirely attributable to exits of low-quality teachers. School Finance Equalization Increases Intergenerational Mobility: Evidence from a Simulated Instruments Approach [SSRN] (under review) NBER Working Paper n. 25600 Policy brief: Voxeu.org This paper estimates the causal effect of equalizing revenues across public school districts on students’ intergenerational mobility. I exploit differences in exposure to equalization across seven cohorts of students in 20 US states, generated by 13 school finance reforms passed between 1980 and 2004. Since these reforms create incentives for households to sort across districts and this sorting affects property values, post-reform revenues are endoge- nous to an extent that varies across states. I address this issue with a simulated-instruments approach, which uses newly collected data on states’ funding formulas to simulate rev- enues in the absence of sorting. I find that equalization has a large effect on mobility of low-income students, with no significant changes for high-income students. Reductions in the gaps in inputs (such as the number of teachers) and in college attendance between low-income and high-income districts are likely channels behind this effect. Effects of Copyrights on Science (with Petra Moser) [SSRN] (under review) NBER Working Paper n. 24255, CEPR Discussion Paper n. 12651 Policy briefs: Voxeu.org, Cato Institute Featured in the NBER Digest, March 2018 Issue This paper investigates the effects of copyrights and access costs on science, using an exogenous change in copyright laws. In 1942 the WWII Book Republication Program (BRP) allowed US publishers to republish exact copies of German-owned science books at a lower price, effectively breaking the monopoly of copyrights. Using two complementary identification strategies we show that this program led to a substantial increase in citations. Lower access costs were a major determinant of this effect: A 10-percent decline in the price of a BRP book led to a 43-percent increase in citations. An empirical analysis of library holdings and the location of citations shows that lower prices helped distribute books to less affluent institutions, allowing a new group of researchers to use these books in their research. These results are confirmed by two alternative measures of scientific output: new PhDs and patents. Career Effects of Mental Health (with Michael Dahl and Petra Moser) [SSRN] Press coverage: Business Insider, 7/16/2015 One in twelve Americans is affected by a mental health disorder. This paper examines the effects of such disorders and treatment, using individual-level registry data on mental health diagnoses. We find that mental health conditions carry immense earnings penalties: Compared with the population, people with depression earn 32 percent less, people with bipolar disorder earn 36 percent less, and people with schizophrenia earn 74 percent less. Even compared with their siblings, they earn 35, 28, and 74 percent less, respectively. People with mental health disorders also face substantially higher risks of zero earnings and disability. To investigate the causal effects of treatments and changes in mental health we examine the approval of lithium as a treatment for bipolar disorder (BD) in 1976. Baseline estimates compare career outcomes for people with and without access to treatment in their early 20s, the typical age of onset for BD. We find that access to treatment eliminates one third of the earnings penalty from BD, reduces the risk of zero earnings by more than one third, and reduces the risk of disability by nearly two thirds. Notably, not only the costs of mental health disorders, but also the benefits from treatments are strongest in the bottom quantiles of earnings. These findings indicate that access to treatment has important implications for economic inequality. Higher Pay or Higher Pensions? Inferring Preferences from Teachers' Retirement Behavior [new draft coming soon] This paper estimates workers' preferences for salaries and retirement pensions using a reform affecting teachers in Wisconsin. In 2011, Act 10 ended collective bargaining (CB) over teachers' pay schedules, triggering a decline in gross pay and in defined-benefits (DB) pensions for some older teachers. The Act also increased teachers' contributions to the pension fund, lowering net pay for all teachers. I use the staggered timing of implementation of the two provisions, and the subsequent variation in net salaries and pensions across teachers and districts over time, to infer teachers' preferences for salaries and pensions from their retirement behavior. Retirement rates more than doubled after 2011, and more than half of this increase was due to a decline in pensions. I estimate a retirement semi-elasticity of -0.59 to net salaries and to 0.12 to pensions, which suggest that teachers are more responsive to changes in present rather than in deferred compensation. I then use an option value model to estimate teachers' preferences, allowing for uncertainty over future pay. The model can be used to evaluate the effects of alternative policies which reduce teachers' pensions while leaving net pay unchanged. |
Work in Progress
“Equilibrium in Teachers’ Labor Markets with Flexible Pay” (with Chao Fu)
“Flexible Pay, Bargaining, and The Gender Gap” (with Heather Sarsons)
“The Effects of Access to Higher Education on Science” (with Petra Moser)
“Flexible Pay, Bargaining, and The Gender Gap” (with Heather Sarsons)
“The Effects of Access to Higher Education on Science” (with Petra Moser)
