The New Economics of Teachers and Education

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Rapidly growing costs of elementary and secondary education are studied in the context of the rising value of women's time. The three-fold increase in direct costs of education per student in the past three decades was caused by increasing demand and utilization of teacher and staff inputs, attributable to growing market opportunities of women and changes in the structure of families. Substitution of purchased teacher and staff inputs for own household time in the total production of children's education and maturation is a predictable economic response to these forces. On the supply side, the 'flexibility option,' that female teachers who take temporary leaves to raise children do not suffer subsequent wage loss upon reentry, is shown to be an important attraction of the teaching profession to women. Other college educated women suffer reentry wage losses of 10 percent per year of leave. The estimated value of flexibility in teaching is 5 percent of life-cycle earnings and will fall as labor force interruptions of women for child-rearing become less frequent. Both supply and demand considerations suggest that the direct costs of education per student will continue to increase in the future, independent of political and other organization reforms of schools.

Published: Journal of Labor Economics, Vol. 15, no. 1, part 2 (January 1997): S104-S139.

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