Invisible Shifts in and Out of the Classroom: Dynamics of Teacher Salary and Teacher Supply in Urban China

Abstract

Background The remarkable economic growth in contemporary China is unprecedented, but scholars voice concerns regarding unintended consequences during this transitional phase. Of particular concern is the constant challenge to staff schools with highly qualified teachers. Purpose This study sets out to understand subtle yet consequential changes in schools during a sustained period of economic boom, through the lens of teacher occupational choice. This study contributes empirically to the teacher occupational choice literature by identifying the magnitude of lag in wage growth and returns to human capital in the teaching profession, and their critical relationship affecting high-ability workers’ career decisions. Research Design Using a nationally representative repeated cross-sectional data set spanning a quarter century (1988–2013), this study estimates Mincer earnings function regression models and multinomial probit regression models to assess wage differentials and heterogeneous rates of return to human capital in teaching and nonteaching sectors, in addition to untangling complex relationships between worker quality and observed occupational choice. Findings We documented several novel facts about teachers in contemporary urban China. First, we found sharp shifts in the relative career attractiveness of teaching, such that a 13% wage premium for teachers in 1988 dissipated over time and regressed to a 11% wage penalty in 2013, when compared with similar workers. Second, returns to tertiary education are markedly higher in nonteaching careers—about 11–15 percentage points more so than in teaching. Third, highly educated workers in younger cohorts are half as likely to become teachers relative to older cohorts, particularly in recent years. Conclusions The authors contextualize findings and discuss appropriate policy implications. Most importantly, holding back teacher wage levels from broader market prices has consequential effects on teacher supply. Policy makers need to reconsider existing forms of teacher compensation arrangements and develop sustainable wage dynamics that can attract and retain bright minds to enter and stay in teaching.