Cost-effective hiring in US high schools: estimating optimal teacher quantity and quality decisions

Abstract

Extensive literature has shown that student attainment outcomes are affected by student-to-teacher ratios and overall teacher aptitude levels, but offers little information about which method offers the greatest student attainment return relative to associated costs. This study provides empirical evidence that staffing policies should consider the cost-effectiveness of teacher-hiring decisions when multiple education policies are effective.

Keywords:

• cost-effectiveness
• class size; hiring strategies
• student attainment
• teacher quality

JEL Classification:

• I21
• J38

Notes

¹ For example, Angrist and Lavy (1999), Krueger (1999) and McKee et al. (2010) showed positive effects on the outcomes from lower student-to-teacher ratios, and Lin (2009), Li and Tobias (2003), Strauss and Sawyer (1986), Ferguson (1991) and Ehrenberg and Brewer (1994) found similar outcomes from increases in teachers' aptitude scores.

² Several studies investigate the cost-effectiveness in education (see e.g. Levin, 1970; Summers and Wolfe, 1977; Levin, 1988; Yeh, 2010). However, these studies focus on specific school districts, potentially limiting their ability to generalize inference across school populations.

³ In 1993, the Scholastic Aptitude Test was officially renamed SAT. Similarly, in 1996, the American College Testing was officially renamed ACT.

⁴ To assure that outliers do not bias elasticity estimates within each quantile of the student attainment distributions, we determine the medians of each teacher input cost, use the Median Absolute Deviation (MAD) to estimate the slope around those medians and evaluate elasticities at the median value.

⁵ Even if one hiring strategy dominates the other with respect to its magnitude of effect on a student attainment, its associated implementation costs may be prohibitively high.