NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Maria Dolores Palacios

Dept. of Economics
Boston University
270 Bay State Road
Boston, MA 02215

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: Boston University

NBER Working Papers and Publications

August 2018The Determinants of Teachers' Occupational Choice
with Kevin Lang: w24883
Among college graduates, teachers have both low average AFQT and high average risk aversion, perhaps because the compression of earnings within teaching attracts relatively risk-averse individuals. Using a dynamic optimization model with unobserved heterogeneity, we show that were it possible to make teacher compensation mimic the return to skills and riskiness of the non-teaching sector, overall compensation in teaching would increase. Moreover, this would make many current teachers substantially worse off, making reform challenging. Importantly, our conclusions are sensitive to the degree of heterogeneity for which we allow. Since even a model with no unobserved heterogeneity fits well within sample, one could easily conclude that allowing for two or three types fits the data adequately....
 
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