Association for Public Policy Analysis & Management

While the school choice debate is often framed as a battle between public school educators and parents, some economists may argue that the two groups ought to be on the same side. In one sense, teachers can be viewed as monopolists exercising their market power over parents and children. However, on the other hand, teachers can be viewed as victims of the monopsony power held by an employer – the government – wielding power over nearly all of the schooling market. After all, since teachers are merely the employees, and not employers, they may not benefit all that much from the government monopoly on publicly raised funds.

We examine whether diminishing monopsony power, through the introduction of public and private school choice programs, benefits teacher salaries and employment in the United States overall. We use year and district fixed effects regression, comparing over 18 thousand public school districts to themselves over two decades, and find that school choice programs increase teacher salaries and employment. Specifically, private school voucher programs increase public school teacher salaries by a tenth of a standard deviation and employment by around seven percent of a standard deviation. Further, we use year and school fixed effects regression, comparing nearly a thousand private schools in Indiana, D.C., and Louisiana to themselves over 14 years, and find that voucher programs largely increase private school teaching jobs by around one standard deviation.