School finance reform and the market for teachers

This dissertation addresses several issues related to the effects of school finance reform on the teacher labor market. The first chapter is an empirical exploration of teacher labor mobility within and out of the profession. Using data from Wisconsin in the 1990's, I estimate the effect of salary and teacher and district characteristics on teachers' decisions to transfer districts or exit teaching. Previous studies of teacher mobility treat attrition as a binary choice where transfers are classified either as stayers or as exits. Either case ignores the possibility that transfer attrition may be influenced by different factors than exit attrition. I estimate separate hazard rates for transfers and exits among new teachers in a competing-risks duration model. The results of the empirical analysis are used to simulate the effect of increases in wages and other policies to retain teachers.;The second chapter explores the possibility that teacher mobility in Wisconsin may have increased after the state adopted caps on school district revenue and on teacher salary increases. Specifically, a fixed effects model is used to estimate the effect that the policy changes have had on teacher salaries and confirms that the revenue limits have had different effects on different districts, with high-salary districts being more strongly affected. I then estimate a model of compensating differentials to uncover changes in relative wages for districts that serve disadvantaged student populations.;The third chapter focuses on the overall costs of educating students up to a threshold achievement level. I use two-stage least-squares to estimate a cost function for elementary and secondary public education using data from Illinois, which is then used to construct a cost index. The cost index represents the variation in costs for districts to achieve an ‘adequate’ standard of performance, where adequacy is a given level of performance on standardized exams. This index can be incorporated into a standard foundation-aid formula to ensure that each district has sufficient resources to achieve an adequate level of education. The analysis specifically focuses on differences in the cost structure of K–12, K–8 and high school districts.