Private school competition raises salaries of public school teachers
A new study shows that increased competition between public and private schools leads to higher salaries for public school teachers.
Teacher salaries rise
In a forthcoming article to be published in the Journal of Labor Research, Ohio University economists Richard Vedder and Joshua Hall examine detailed data on over 600 Ohio school districts. They found that when viable private school alternatives exist, competition between public and private schools increases the salaries of public school teachers. [1]
Vedder and Hall found that competition between private and public schools could increase salaries by more than 5 percent. [2]
Their research confirms the findings of Harvard University’s Caroline Hoxby, who reached similar conclusions regarding the relationship between competition and salaries at the national level. [3]
Last year, in another study of the impact of private school competition on public schools, Vedder and Hall found an additional benefit: increased achievement for public school students. [4]
Salaries, private school enrollment vary in Ohio
Vedder and Hall also found that variation in average public school teacher salaries among districts is great within Ohio, ranging from $24,070 to $51,352 in 1996. The estimated average Ohio teacher salary in 1997 was $38,700. [5] There also exists a great deal of variability between the proportion of students who attend private schools in a given Ohio district, ranging from zero to 42.52 percent. [6]
Notes
[1] Richard Vedder and Joshua Hall, Private School Competition and Public School Teacher Salaries (Athens, Ohio: Ohio University, February 1999). Vedder and Hall note that teacher unions have fiercely fought public policy measures (e.g., vouchers, tuition tax credits) that might increase the proportion of students attending private schools. Yet increased competition in the educational service market should also lead to greater labor market competition and thus higher teacher salaries. "It may be that union leaders disregard the interests of their members in trying to maximize union size and power," said Vedder and Hall.
[2] Ibid, p. 8. For purposes of this analysis, Vedder and Hall compared a single public school district with no private schools to a county with twelve public school districts and twenty percent of the students in private schools.
[3] Caroline M. Hoxby, "Do Private Schools Provide Competition for Public Schools?" NBER Working Paper 4978 (Cambridge, Mass.: National Bureau of Economic Research, 1994). "Greater private school competitiveness does lower total public school budgets (per-resident spending) but appears to leave per-pupil spending unchanged. Public schools that face more private school competition react by reallocating their given per-pupil spending toward teacher salaries. We may speculate that competition induces public schools to allot their funds toward more productive uses," said Hoxby.
[4] Private Schools and Public School Performance: Evidence from Ohio (Athens, Ohio: Ohio University, August 1998). See "Private school competition improves public school performance," Policy Note (Dayton, Ohio: The Buckeye Institute for Public Policy Solutions, December 1998). Harvard's Caroline M. Hoxby also found that greater private school competitiveness significantly raises public school student achievement, measured by educational attainment, wages and test scores. Hoxby, p. 1.
[5] These results are consistent with other studies that found increased competition improves student achievement. See John P. Blair and Samuel R. Staley, "Quality Competition and Public Schools: Further Evidence." Economics of Education Review, Vol. 14, No. 2 (1995), pp. 193-198.
[6] Vedder and Hall, p. 4. The district paying the highest average public school teacher salary is Perry Local School District in Lake County, while the lowest is Frontier Local School District in Washington County. Interestingly, Perry Local benefits from the presence of a nuclear power plant within its taxing district. A two-to-one ratio of average salaries in the highest vs. lowest paying district has been observed in other states. Ohio tends to be right in the middle of states in rankings on most educational variables including teacher salaries, suggesting it is rather typical of all states.
[7] Vedder and Hall, p. 5. The private school data are from the 1990 Census.
