Summary: Using data from Pakistan, we show that existing methods produce unbiased and reliable estimates of teacher value added (TVA) despite significant differences in context. Although effective teachers increase learning substantially, observed teacher characteristics account for less than 5 percent of the variation in TVA. The first two years of tenure and content knowledge correlate with TVA in our sample. Wages for public sector teachers do not correlate with TVA, although they do in the private sector. Finally, teachers newly entering on temporary contracts with 35 percent lower wages have similar distributions of TVA to the permanent teaching workforce.

Teacher Value Added in a Low-Income Country

Citation: Bau, Natalie and Jishnu Das. 2020. “Teacher value added in a low-income country.” American Economic Journal: Economic Policy, 12(1), pp.62-96.

Natalie Bau

Jishnu Das

Teachers are key to the quality of learning, but their effectiveness is difficult to predict and not linked to their wages in the public sector. Extensive research from the United States clearly establishes the importance of good teachers for students’ learning outcomes. It also shows that predicting teacher quality is difficult. Unfortunately, we don’t know whether these findings also apply to low-income countries. Filling this gap is critical: student learning in these countries is poor, and teacher salaries account for 80 percent of recurring education expenditures. Increasingly, countries are asking how to recruit and retain high-quality teachers.

In this paper, we investigate these issues using a unique data set on primary school students and their teachers in both public and private schools in Punjab, Pakistan, for 2004–07. The data track students through primary school, matching them to the teachers who taught them in each year. One novel aspect of the data set is that it includes scores on primary-school-level tests in Urdu, English, and math for both students and teachers.

Study Design and Findings

Effective teachers increase learning substantially

Using student test score data, we calculate a value added (as a proxy for productivity) for each teacher: an estimate of the test score gains that a random student would receive if assigned to that teacher. These estimates show that moving a student from a teacher at the 5th percentile to one at the 95th would increase the student’s test scores by 0.5 standard deviations —the equivalent of more than a year of school.

So teachers clearly matter. But as in the United States, predicting their effectiveness is hard. We find that only teachers’ content knowledge (as measured by their scores on the primary school tests) and their first two years of experience predict their value added. Neither a bachelor’s degree nor teacher training—two factors often used in teacher recruitment—is associated with value added.

Wages are correlated with teacher effectiveness in the private sector but not the public sector

Are there teacher characteristics that predict higher salaries in Pakistan? We examine this issue in both the public and private sectors. Results show that having a bachelor’s degree positively predicts wages in both sectors. And in the private sector, teachers with higher value added are paid more. In the public sector, however, there is no relationship between teacher value added and wages. These findings suggest that teacher value added is at least somewhat observable and that the private sector identifies and rewards better teachers with higher wages. In contrast, higher wages in the public sector are not associated with higher teacher value added.

A policy that hired contract teachers on 35% lower salaries did not reduce incoming teacher quality

A change in hiring practices in Punjab makes it possible to assess how teacher wages affect the quality of applicants. In 1998 Pakistan initiated unanticipated nuclear tests, which led to international sanctions on the country and tighter budget constraints in the province. As a result, teacher hiring was largely frozen for three years. When hiring resumed, almost all new teachers were hired under temporary contracts with 35 percent lower salaries. With the caveat that the new teachers’ contract status may have increased accountability, we compare the productivity of teachers hired right before the nuclear tests with that of teachers hired right after hiring resumed to see whether lower salaries attracted worse teachers.

The results show no negative effect of being hired at a lower salary on teacher productivity. Indeed, when we account for the fact that teachers are observed at different levels of experience, contract teachers performed better than permanent ones.

Altogether, these results suggest that calls to improve student learning by raising teacher wages, while keeping the same hiring and pay structure in place, are misguided. Redesigning compensation systems for government employees is complex enough as it is; one issue that policy makers need not worry about is that teacher salaries are too low to attract talented teachers.

Study Resources

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As a condition of use, please cite as: Bau, Natalie and Jishnu Das. 2020. “Teacher value added in a low-income country.” American Economic Journal: Economic Policy, 12(1), pp.62-96.

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World Economic Society Meetings Presentation

Teacher Salaries in Public and Private Schools