Abstract
We exploit data on centralized teacher recruitment in Peru to establish that wage rigidity creates large urban-rural disparities in teacher effectiveness. Leveraging a teacher compensation reform, we provide causal evidence that increasing salaries in less desirable locations attracts qualified teachers and improves student learning. We estimate a model of teacher sorting and student achievement featuring rich heterogeneity in teachers’ preferences and effectiveness. Substantial equity and efficiency gains arise from reallocating existing teachers to exploit match effects or attracting applicants with higher average effectiveness into public teaching. Counterfactual wage schedules achieving these gains suggest that the latter is more cost-effective.
JEL codes
- J31: Wage Level and Structure • Wage Differentials
- J45: Public Sector Labor Markets
- I21: Analysis of Education
- C93: Field Experiments
- O15: Human Resources • Human Development • Income Distribution • Migration
Reference
Matteo Bobba, Tim Ederer, Gianmarco Leon-Ciliotta, Christopher Neilson, and Marco Nieddu, “Teacher Compensation and Structural Inequality: Evidence from Centralized Teacher School Choice in Peru”, Journal of Political Economy, August 2026, forthcoming.
See also
Published in
Journal of Political Economy, August 2026, forthcoming