Christopher A. Neilson, Princeton University

Teacher compensation and structural inequality: Evidence from centralized teacher school choice in Peru

Abstract

This paper studies how increasing teacher compensation at hard-to-staff schools can reduce inequality in the access to high-quality teachers. We first document dramatic inequities in schooling inputs and teacher quality to which students have access in the context of Peru, a large and culturally diverse developing country. We then leverage a change in teacher compensation to show causal evidence that increasing salaries at less desirable public schools attracts better quality applicants and improves subsequent student test scores. We finally estimate a model of teacher preferences over local community amenities, school characteristics and wages using detailed job posting and application data from the country-wide centralized teacher assignment system. The fitted model is able to replicate the main features in the data, including the sorting patterns of teachers around the policy change in teacher wages. Model estimates indicate that while current pay bonuses in less desirable regions are helpful, the current policy is woefully insufficient to compensate teachers for the lack of school and community amenities, especially in school vacancies that are distant to the teachers home town or the location of their current job. Counterfactual experiments taking into account equilibrium sorting show that budget-neutral changes in the current wage schedule can achieve a remarkably more equitable distribution of teacher quality across regions.

Prof Neilson has a joint appointment in the Economics Department and the Princeton School of Public and International Affairs. He recently earned his PhD from the Department of Economics at Yale University.

Chris Neilson is an applied microeconomist whose research focuses on the study of markets where private firms compete with public providers and there are substantial subsidies and regulation. He studies the interaction of these market features and how they affect the strategic behavior of firms drawing on insights from the industrial organization literature. This framework is used in the design and evaluation of public policies when the supply-side reaction is expected to be an important part of the story.

Prof. Neilson’s research in policy evaluation looks to quantify the impact of a policy while tracing out the demand and supply mechanisms behind said effect. This understanding is crucial in guiding the design of future policy that will take into account the strategic behavior of firms and how they react to changing consumer demand induced by the policy.He studies the interaction of these market features and how they affect the strategic behavior of firms drawing on insights from the industrial organization literature. This framework is used in the design and evaluation of public policies when the supply-side reaction is expected to be an important part of the story.

In particular, Prof. Neilson’s research in policy evaluation looks to quantify the impact of a policy while tracing out the demand and supply mechanisms behind said effect. This understanding is crucial in guiding the design of future policy that will take into account the strategic behavior of firms and how they react to changing consumer demand induced by the policy.

His recent research has applied these ideas to the study of education markets in Chile. These markets have a significant private sector and public-private interaction as a dominant feature of the market. In ongoing work, Prof. Neilson is exploring similar concepts in new projects working with the governments of Peru, Mexico, and the Dominican Republic. His general fields of study include Public Economics, Labor Economics, and Industrial Organization.

A second theme in his research agenda is a focus on working with governments and administrative offices that are currently designing or implementing policies relevant to his areas of interest. While this partnership clearly limits the range of potential policies Prof. Neilson can study to those that are politically feasible, it ensures the policy relevance of the studies as well as access to administrative data. Importantly, this relationship with policymakers will often present the opportunity to influence the design of the policy, both to potentially improve policy based on prior evidence as well as to facilitate ex post evaluation.

You can read more about Chris Neilson here

CEBI contact: N. Meltem Daysal & Mette Ejrnæs