Nasim, Bilal; Bryson, Alex; Anders, Jake; Horvath, Hedvig; Horvath, Hedvig; (2021) The Effects of Pay Decentralisation on Teachers' Pay and Teacher Retention. In: Economics of Education Program Meeting, Spring 2021. NBER (National Bureau of Economic Research): Cambridge, MA, USA.

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Abstract

In 2013/14 the arrangements for setting teacher pay in England were radically reformed. A system of seniority-based progression was replaced by a decentralised system allowing schools to pay teachers based on individual performance and local labour market conditions. Using a data-driven strategy, we classify schools into four groups according to what form of flexibility they adopted, then use this classification to analyse how pay flexibility affected teachers’ pay and retention. About 9% of schools speeded up pay progression relative to what would have been expected in the seniority-based scheme, while about twice as many slowed it down. Teachers in these schools saw wages increase (decrease) by 5 (3) per cent on average. These wage changes seem to have little effect on teacher retention, suggesting school-specific labour supply in England is highly inelastic, implying large monopsony power for schools.

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