Economics of Education Review 20 2001 63–70 www.elsevier.comlocateeconedurev
Determinants of intrastate variation in teacher salaries
Michael L. Walden , Zulal Sogutlu
Department of Agricultural and Resource Economics, North Carolina State University, Box 8109, Raleigh, NC 27695-8109, USA Received 25 August 1998; accepted 7 July 1999
Abstract
Previous work on understanding the determinants of average teacher salaries has focused on interstate variation. This study addresses determinants of intrastate variation in teacher salaries. Using the model developed by Walden and
Newmark, average teacher salaries in North Carolina school districts are related to variation in the local cost-of-living, personal characteristics of teachers, job characteristics of the teaching positions, and local demand factors. A key finding
is that, like interstate studies, we find local salaries are related to local cost-of-living measures. Also, after accounting for education and experience characteristics, local teacher salaries are higher in districts with a greater proportion of
secondary teachers, in districts with larger average school sizes, and in districts with a greater demand for education.
2001 Elsevier Science Ltd. All rights reserved.
JEL classification: J21; J45 Keywords: Teacher salaries; Local teacher markets
1. Introduction
Teacher pay continues to be an issue under consider- able discussion in the country. State and local govern-
ments grapple with claims that teachers are underpaid relative to other professions. Also, the periodic rankings
of average teacher pay by state are used by teachers in low-ranking states to argue for higher salaries.
The interstate variation in teacher salaries has received attention in numerous studies Fournier Rasmussen,
1986; Kasper, 1970; Levinson, 1988; Nelson, 1991; Walden Newmark, 1995. For example, Walden and
Newmark 1995 found that three-quarters of the inter- state variation in teacher salaries could be explained by
a combination of personal characteristics of teachers, job characteristics of teaching positions, factors measuring
the demand for education, and the state cost-of-living.
Corresponding author. Tel.: +
1-919-515-4671; fax: +
1- 919-515-1824.
E-mail address:
michael.waldennscu.edu M.L.
Walden.
0272-775701 - see front matter
2001 Elsevier Science Ltd. All rights reserved. PII: S 0 2 7 2 - 7 7 5 7 9 9 0 0 0 5 5 - 2
Only a few studies have considered the intrastate vari- ation in
teacher salaries Chambers 1985,
1978; DeTray Greenberg, 1977; Eberts Stone, 1984.
However, these studies have not considered the full complement of factors cited in the interstate studies. In
particular, all did not account for differences in the local cost-of-living on the variation in local teacher salaries,
and those that did used either wages Chambers, 1978 or locational dummy variables Chambers, 1985 as
proxies for the cost-of- living Chambers, 1978.
There are three reasons for being interested in intra- state variation in teacher salaries. First, hard-to-measure
factors like teacher union power and methods of financ- ing education, which must be controlled for in interstate
studies, are generally constant within a single state. This may make it easier to identify the effects on teacher sal-
aries of other important factors like teacher and school district characteristics.
Second, we want to know if the teacher labor market functions similarly within a state as it does between
states. That is, are the same factors that have been found to be related to interstate variation in teachers salaries
also determinants of intrastate variation?
64 M.L. Walden, Z. Sogutlu Economics of Education Review 20 2001 63–70
Third, there are important policy implications for local public decision-makers from understanding the determi-
nants of teacher salaries at a local district level. Under- standing the characteristics that affect local teacher salar-
ies will help school administrators and school boards deploy resources more efficiently. For example, if it is
found that larger schools are considered a disamenity by teachers requiring a salary premium, then school districts
may want to account for this finding when constructing new schools.
This paper analyzes intrastate variation in teacher sal- aries in one state, North Carolina. We are interested in
the individual and collective influence of local market factors, such as the local cost-of-living, personal and job
characteristics, and demand factors, on teacher salary. A particular challenge in the study is the selection and test-
ing of alternative cost-of-living indicators.
2. Model
