Bjarne Strøm

Teacher sorting, teacher quality, and student composition

Abstract Using panel data for Norwegian schools, we establish a two-equation supply and demand model for teachers with approved education. Taking into account nationally determined teacher pay and a strict teacher appointment rule, the data enable us to separately estimate supply and demand functions for certified teachers. The results clearly indicate that the student body composition, and in particular students belonging to ethnic minorities, influences both teacher supply and teacher demand. The implied negative relationship between excess demand for certified teachers and the share of minority students is likely to be important for teacher quality.

Envy, Fairness and Political Influence in Local Government Wage Determination: Evidence from Norway

The main question in this paper is: Do wages of low-skilled workers in Norwegian local governments adjust to clear the labor market for such workers, or are the wages affected by trade unions comparing their wages with other wages inside the local governments? The main empirical findings are as follows. First, wages of low-skilled local government employees respond not to wages in the external labor market, but to wages of higher skilled and higher paid workers inside the local government. Second, wages are positively associated with the share of socialist politicians in the local council. These results are interpreted as support for a union model with internal pay comparisons in Norwegian local governments. Copyright 1995 by The London School of Economics and Political Science.

Efficiency Wages, Interfirm Comparison, and Unemployment

The paper presents an efficiency wage model where worker effort depends on own wages relative both to wages of other workers in the firm and to similar workers in other firms. First, we show how the Solow conditions are modified if internal comparison effects are at work. Second, we discuss the effect of internal wage comparison on wage inequality within firms. Third, we study unemployment and relative wage determination within a general equilibrium model, and analyze the effect of technological change and various tax policies on equilibrium unemployment and relative wages. Finally, the short-run effects of aggregate demand shocks are analyzed.

Wages, Prices and Politics: Evidence from Norway

This paper studies the empirical relevance of the close ties between a central trade union and the social democratic political party using time series data for Norway. Using a structural wage-price model we estimate that changing from a bourgeois to a social democratic government reduces manufacturing wages in the long run by 2.3 percent. This result is consistent with a wage bargaining model augmented by political preferences of the union leaders. Private service wages are not directly affected by government type, but wage spillover effects imply that the long-run dampening effect in the private service sector is around 2 percent. The results also support the proposition of the Scandinavian model of inflation that the traded goods sector is the wage leader.

Upper Secondary School Completion and the Business Cycle

Previous evidence suggests that enrollment in post-compulsory education increases (decreases) in cyclical downturns (upturns). However, little evidence exists on whether enrollment is successfully transformed into completed education. This paper adds to the literature by analyzing the relationship between completion of upper secondary education and regional unemployment using Norwegian regional panel data on students graduating from compulsory school between 1981 and 2004. We find robust evidence that completion rates are countercyclical. Our results suggest that poor labor-market conditions when starting upper secondary education have a lasting effect and motivate students to stay in school and graduate.

Wages and Politics: Evidence from the Norwegian Public Sector

The paper presents empirical results for wage setting in the Norwegian local and central public sector. Our results imply that central and local government wages are completely autonomous processes both in the short-run and in the long-run. This suggests that the formal strong coordination of wage setting in the two sectors at the national level does not determine the final outcome. We find that a stronger central government will reduce wages in the local government sector. The evidence also suggests an electoral cycle in the local--but not in the central government sector. Copyright 2001 by Blackwell Publishing Ltd

Fiscal Institutions and Wage Bargaining in the Local Public Sector

In a theoretical analysis of the properties of different wage setting and financing systems in the local public sector, two financing systems are considered. A benchmark model with local financing through local taxes is compared with a system of centralized financing through grants, where taxes are decided at the national level. It is shown that the wage outcomes under centralized financing depend heavily on the order of moves in the budgetary game between the central and local levels. Copyright 1999 by The editors of the Scandinavian Journal of Economics.

Do Smaller Classes Always Improve Students’ Long-run Outcomes?

We exploit the strict class size rule in Norway and matched individual and school register information for 1982?2011 to estimate long run causal effects on income and educational attainment. Contrary to recent evidence from the US and Sweden, we do not find any significant average effect on long run outcomes of reduced class size. We further use the large register data set and quasi-experimental strategy to estimate whether the class size effect depends on external conditions facing students and schools, such as teacher quality, extent of upper secondary school choice, school district size, local fiscal constraints and labor market conditions. Overall, we find that the class size effect does not depend on school district characteristics. The absence of class size effects on long run outcomes in Norway is consistent with earlier findings for short run outcomes using comparable data and empirical strategies.

A Cost Model of Schools: School Size, School Structure and Student Composition

This chapter analyses the relationship between school resources and school and student body characteristics. School mergers and school district consolidation have been a controversial issue in several countries, including the United States, United Kingdom and Norway. 1 To have measures of financial benefits of such policies one needs estimates of the economies of scale in education. The available literature indicates sizable potential cost savings of consolidation, see for example Andrews et al. (2002) and Taylor and Bradley (2000). A separate argument, why economies of scale in education are important, is the existence of maximum class size rules, which is common in many countries. A reduction in the number of students does not necessarily affect the number of teachers simply because it does not need to affect the number of classes. State aid to school districts typically tries to take not only objective cost differences into account, related to scale economies, but also differences due to variation in student composition. Students from certain demographic groups, for example students from ethnic minorities, may be more costly than other students, and it is usually argued that school districts with a large share of these types of students should for equity reasons be compensated with higher state aid, see for example Downes and Pogue (1994)

Employment and Wages in the Private and Local Government Sectors in a Centralized Fiscal System

This paper discusses the interaction between the local public sector in an institutional context consistent with a centralized fiscal system. Under decentralized wage setting in the private sector, the effects of shocks in the two sectors depend on whether private and local public goods are substitutes or compliments in the union utility function. Higher wage markup in the local government sector unambiguously decreases government output, while the effect on private sector employment is ambiguous. Higher income taxes have ambiguous effects on local government output. Shocks in the private sector can be reinforced through feedback effects from the local government sector. A shift from decentralized to centralized wage setting in the private sector reduces wages and increases employment in both sectors. Copyright 1997 by Scottish Economic Society.