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The Impact of Incentives to Recruit and Retain Teachers in “Hard-to-Staff” Subjects | JPAM Featured Article

By Li Feng, Department of Finance and Economics at Texas State University, and Tim Sass, Andew Young School of Policy Studies at Georgia State University

Article Introduction

Public school teachers are typically paid according to their education level and years of experience, with no differentiation by subject. However, teachers with transferable skills that are valued in other occupations, such as math and science teachers with technical skills, or teachers with knowledge of foreign languages, have relatively high opportunity costs and thus would be expected to garner a wage premium in an unfettered market. As a result, school districts often have great difficulty in hiring and retaining teachers in these subjects and chronic shortages exist. Given resistance among teachers and unions to explicit pay differentials, states and school districts have frequently sought to mitigate subject-specific shortages by enhancing non-salary compensation, such as educational subsidies.

One of the longest running such programs, the Florida Critical Teacher Shortage Program, was established in 1984 to increase the labor supply of teachers in “hard-to-staff” areas. This study exploits inter-temporal variation in covered subjects and generosity of payments to estimate the causal impact of loan forgiveness and bonuses on retention of teachers in Florida public schools. The evidence indicates that modest annual forgiveness amounts ($500-$1,000) are effective at substantially reducing attrition among middle and high school math and science teachers and larger amounts ($2,500) are necessary for retaining special education teachers. One-time bonuses have even larger impacts on teacher retention.

This article preview is from the Winter 2018 issue of the Journal of Policy Analysis and Management (JPAM). APPAM invites authors from each issue to asnwer a few questions about their research to further promote the quality work in the highly-ranked research journal. Check out this and other JPAM articles online.


Author Interview

What spurred your interest in this research on “hard-to-staff” teaching positions, or educators more broadly?

Both of us are interested in the broad question of how to enhance the quality of the teacher labor force. One of Li’s prior research publications focused on the teacher labor market in the state of Florida and nationwide (Feng, 2009). That research pointed out some interesting findings on differential teacher turnover by subject areas which led our initial investigation of the long-standing Florida Critical Teacher Shortage program. We carried out a small scale feasibility study and obtained research funding from the Institute of Education Sciences. This paper is a result of that funded project.

While these incentive programs have significant results in the short term, could it be argued that they are not worth the state funding in the long run and do you agree? Is there a value to retaining a teacher for a few years using loan forgiveness or similar programs, even if they do not stay in a high needs area long-term?

We show in our paper that loan forgiveness and bonus programs are effective in retaining teachers in the short run. Reducing attrition in the short-run, particularly for early-career teachers can produce substantial gains, as teachers become more productive with additional experience early in their careers. We show in the paper than these gains in productivity more than offset the costs associated with loan forgiveness and bonuses.

So, yes, even if the teachers leave after their loans are paid off and they no longer receive direct benefits from the loan forgiveness program, there is still a positive net benefit. While the loan forgiveness program is not relevant to teachers who have been in the profession several years, with each new cohort of beginning teachers, there are net gains to be had by continuing the program. Retention of more experienced teachers would have to be addressed by other sorts of incentives, including possibly allowing for differential pay across subject areas or across school environments. However, we did not explore these sorts of policies in the current paper.

These programs proved cost-effective. Your research concludes that the estimated financial benefits of the loan forgiveness and bonus programs exceeded the costs. Additionally, school districts better avoid costs to recruit, hire and train replacement teachers. How would you recommend districts or states mimic the programs with similar results?

In terms of program design, we think there are a number of important lessons one can learn from the experience of the State of Florida. First, the magnitude of incentives matter. When Florida reduced funding for their loan forgiveness program, it dampened the impact of the program. Second, the reaction of teachers to any given incentive will vary across subject areas; the compensation required to keep one type of teacher in the profession may not be sufficient for another type. Third, direct monetary inducements, such as bonuses, seem to have greater effects than do more indirect compensation schemes, like loan forgiveness.

Based on these findings, why were payments to special education teachers only statistically effective at greater amounts?

Special education teachers often face more challenging working conditions than do general education teachers. For example, they are usually faced with much a heavier work load, both in terms of additional paperwork and the challenges associated with accommodating students with different needs and abilities. Indeed, prior work has found that turnover tends to be relatively high for special education teachers. Consequently, it is not surprising that in order to retain special education teachers, the magnitude of the incentive needs to be greater.

Given that direct payment of bonuses had a greater impact than loan subsidies, can you conclude that an equivalent increase in base pay would have a similar result in retention? Or is the significance of a “bonus” part of the value to teachers?

We would expect that increases in base pay with have as large or larger impacts on teacher retention than do bonuses. With bonuses, there is uncertainty whether they will continue in the future. Given teachers tend to be risk averse, we would expect the relatively surety of future compensation resulting from an increase in base pay would be more likely to keep teachers in the profession than bonuses. However, we have no direct evidence on the relative efficacy of bonuses and increases in base pay at this time. It is also important to note that the compensation required to retain teachers varies across subject areas and thus across-the-board increases in base pay are not the most cost effective way to enhance teacher retention.

How does this study impact or add to the existing research that can inform educator staffing policies? What would be the ideal next step for your research findings? How would you like to see your findings implemented?

While there have been numerous studies that investigate the extent of teacher turnover and its relationship to working conditions, analyses of policies designed to reduce turnover have been more limited. In particular, ours is the first large-scale study of the effects of loan forgiveness on teacher retention and the first to directly compare the efficacy of bonuses and loan forgiveness. Given the positive impacts we find on teacher retention, we would like to see more districts and states consider experimenting with differential pay schemes for teachers where compensation varies across subject areas and grade levels.


About the Authors

FENG

Li Feng is an Associate Professor in the Department of Finance and Economics at Texas State University. She is an affiliated researcher with the National Center for Analysis of Longitudinal Data in Education Research. She served as a Visiting Scholar at the Center for Education Policy Analysis at Stanford University and a Visiting Fellow in the Brown Center on Education Policy Program at the Brookings Institution in 2016-2017. Her research interests include economics of education, labor economics, and health economics.

Specifically, her work examines education policy issues related to teachers such as the impact of loan forgiveness on teacher retention, the relationship between teacher quality (value-added) and student outcomes, the nexus of school accountability and teacher labor market, the connection between classroom characteristics and teacher mobility, and the role of Collective Bargaining Agreements in the distribution of teachers across schools. She has published in both economics and education journals such as the Journal of Urban Economics, Educational Evaluation and Policy Analysis, Education Finance and Policy, and Economics of Education Review. Her research has received grant funding from the Institute of Education Sciences and the National Science Foundation. She received a B.A. in International Economic Cooperation from Xi’an Foreign Language University in China, an Ed.S. degree in International Development Education and a Ph.D. in Economics from Florida State University.

 
Tim_Sass_009PSF_220x292

 
Tim Sass is a distinguished university professor of economics at Georgia State University whose research focuses on the economics of education. Specific areas of interest include teacher labor supply, the measurement of teacher quality and school choice.  His work has been published in numerous academic journals, including the Quarterly Journal of Economics, Journal of Public Economics, Journal of Labor Economics, Review of Economics and Statistics, Journal of Law and Economics and Journal of Policy Analysis and Management.  His research has been supported by grants from the U.S. Department of Education, the Gates Foundation, the Smith-Richardson Foundation and the Spencer Foundation.  He has acted as a consultant to school systems in Atlanta, GA, Charlotte, NC, New York City, Washington, DC, the State of Florida and the State of New York.  He is a senior researcher at the Center for Analysis of Longitudinal Data in Education Research (CALDER) and serves as an associate editor of the Journal of Human Resources.


Submit Your Research to JPAM

JPAM seeks contributions that span a broad range of policy analysis and management topics with an emphasis on research that conveys methodologically sophisticated findings to policy analysts and other experts in the field. Both domestic and international contributions in public management are welcome, as well as a broad range of policies related to social well-being, health, education, science, environment, and public finance. JPAM strives for quality, relevance, and originality. An interdisciplinary perspective is welcome as are articles that employ the tools of a single discipline.

Find information for prospective authors and submit manuscripts via Editorial Express.

 

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