Revisiting the Hedonic Wage Function for Teachers: Charter Schools and Compensating Wage Differentials
Friday, November 13, 2015
Flamingo (Hyatt Regency Miami)
*Names in bold indicate Presenter
Historically, collective bargaining between unions and school districts has impeded the estimation of hedonic wage functions for teachers. As a result, we have little information on how teachers value positive and negative job attributes. The growth of privately operated public charter schools has created a new teacher labor market where decisions regarding both compensation and job attributes are decentralized to school managers. This creates the opportunity to observe how teacher wages vary with school attributes in a hedonic wage function, as well as to compare the value of teacher characteristics (such as experience) in centralized vs. decentralized hiring. In this study, we use teacher compensation from the City of New Orleans to estimate a hedonic wage function for teachers. More than 90% of New Orleans public schools are charter schools with local control over hiring, compensation, and job attributes. In this setting, we examine what attributes of teachers, schools, and neighborhoods are related to teacher pay and estimate wage premiums for hard-to-staff positions. We also explore the influence of charter market share, collective bargaining, and monopsony hiring on the flexibility of teacher pay by comparing the hedonic wage function in New Orleans to other Louisiana school districts (with and without CBAs) where charter schools are the minority and most hiring is centralized within a traditional school district.
Preliminary results suggest that charter schools are able to provide compensating wage differentials for negative job attributes, partially reversing the perverse incentives of CBAs. Charter schools also vary in the degree to which they invest in teacher compensation compared to other inputs.