Teacher-associated expenditures and student achievement

Abstract

Inconsistent evidence exists within the economics of education research literature with respect to the relationship between teacher salary and student performance. This paper shows that such inconsistency of results could be attributed to simultaneous equation bias and model misspecification. Using alternative model specifications, alternative implications are suggested. Where additional relevant variables such as a measure of cognitive skills and a measure of the degree of market competition are included and where the statistical model reflects relevant theoretical considerations, evidence of a positive and significant relationship between teacher-associated expenditures and student academic achievement does not exist.