Torberg Falch

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.

The Effect of Education on Cognitive Ability

This paper analyzes whether schooling increases intelligence measured by intelligence quotient (IQ). We use a longitudinal dataset where the individuals have conducted IQ tests both at ages 10 and 20. We estimate the effect of schooling on IQ at age 20 conditional on IQ at age 10 and other measures of early cognitive ability to account for selection into noncompulsory schooling. Ordinary least squares estimates indicate that 1 year of schooling increases IQ by 2.9–3.5 points (about 0.2 SD deviations), and instrumental variables estimates are similar.

The Elasticity of Labor Supply at the Establishment Level

Monopsonistic wage‐setting power requires that the supply of labor directed toward individual establishments is upward sloping. This study utilizes institutional features to identify the supply curve. The elasticity of labor supply is estimated using data for the Norwegian teacher labor market in a period where the only variation in the wage level was determined centrally and with information on whether there is excess demand or not at the school level. In fixed‐effects models, the supply elasticity faced by individual schools is estimated to about 1.4 and is in the range 1.0–1.9 in different model specification.

Political economic determinants of school spending in federal states: Theory and time-series evidence

Abstract To develop the understanding of public sector growth, this paper addresses the determinants of one important component of public spending, public education. Disaggregation of school expenditure allows for an analysis of how different decisions at the national and the local government level contribute to increased spending. A bargaining model between the central government and a teacher union is combined with a demand model of educational services at the local government level. Political characteristics are assumed to influence the central government bargaining strength over teacher wages and working hours. The model is implemented using a database for economic, political and school factors in Norway during 1880–1990. Political strength, measured as stable government and low party fragmentation of parliament, is shown to be important to hold down teacher employment. Socialist orientation of the government tends to drive up both teacher wages and employment. The inelastic response of local governments to centrally determined cost factors imply that they are not able to hold back spending growth following higher costs.

Local public choice of school spending: disaggregating the demand function for educational services

Abstract The determinants of school spending are investigated using a disaggregated demand model augmented to include political factors. High school spending by county governments is disaggregated to identify the sources of variation in teacher–student ratio, non-wage spending per student, and student enrollment. The disaggregation throws new light on the role of cost factors in explaining the expansion of educational services. High school spending is shown to be highly inelastic to county revenue and major cost factors. The spending decision is analyzed as an example of the common pool problem in distributive politics. Schools offer benefits to each municipality, and municipalities fight for new schools since the costs are shared. The political decision implies a balancing between this spending pressure and the coordinated interests of the county. Political strength, measured by the party fragmentation of the council, is shown to hold down costs and allow for more student enrollment. On the other hand, the spending pressure measured by the average size of the municipalities in the county, influences all three spending components, and the effects depend on the political strength.

Collective bargaining in the public sector and the role of budget determination

Abstract This paper considers collective bargaining in a public sector institutional setting. The model demonstrates how budget constraints and hierarchical structure affect the bargaining outcome. A trade union bargains over wage and employment either with an output-maximizing bureau or the bureaus sponsoring institution. The slope of the contract curve depends on the bargaining level because the budget constraints differ. Various assumptions are made about the timing of the sponsors decision concerning the budget of the bureau. Local bargaining and budget determination between the wage and employment bargains can be optimal for the sponsor because it yields a low wage.

Sources of Cost Expansion: Primary Education in Norway 1946–1990

Primary school spending growth is a concern in the public debate in Norway. During the 1980s, real spending per student increased by 35%, but no improvement in student performance has been documented. School spending in decided in a complicated process involving central and local governments and bargaining with teacher unions. In this econometric study the primary school spending growth is shown to be the result of cost factors determined at the national level together with lack of adjustment to rising costs in local governments. Policies to control school spending must address the bargaining strangth of the central goverment to hold back on teacher wages and teacher employment and the responsiveness of local governments to higher costs.

Decentralized Public Sector Wage Determination: Wage Curve and Wage Comparison for Norwegian Teachers in the Pre‐WW2 Period

The recent trend towards decentralization of European public sector wage determination relaxes some of the central administered wage setting mechanisms developed in the postdWW2 period. This paper discusses teacher wage determination in Norway in 1905-39, a period with a highly decentralized public sector wage formation. Separate wage equations for urban and rural areas are estimated. I find that the responsiveness to unemployment of the urban wage was of the same magnitude as in the postdWW2 period private sector wage formation. In addition, the internal teacher labour market and local economic conditions influence the wage level. The rural wage mainly followed the urban wage. Copyright Fondazione Giacomo Brodolini and Blackwell Publishers Ltd 2001.

Wages and Recruitment: Evidence from External Wage Changes

In this article, the author estimates the causal effect of the wage level on the recruitment rate in establishments. During the 1990s, the wage setting for certified teachers in Norway was completely centralized, with a state-paid wage premium of about 10% at some schools with severe recruitment problems. The empirical approach exploits within-school variation in wage-premium eligibility and that actual teacher supply is empirically observed at schools with excess demand for teachers. In a difference-in-differences framework, the wage premium increases the recruitment rate by 6 to 7 percentage points. This finding is robust to model specification and indicates that the recruitment elasticity to the wage is equal to the separation elasticity in absolute terms. The implied short-run labor-supply elasticity for individual establishments is about 1.4. It is also evidence of a diminishing return to scale in recruitment activity, a central assumption in search-theoretic models of imperfect competition in the labor market.

The Effect of Early Cognitive Ability on Earnings Over the Life‐Cycle

This paper utilizes information on cognitive ability at age ten and earnings information from age 20 to 65 to estimate the return to ability over the life-cycle. Ability measured at an early age is not influenced by the individual’s choices of schooling and other circumstances. We find that most of the unconditional return to early cognitive ability goes through educational choice. The conditional return is increasing for low levels of experience and non-increasing for experience above about 15-25 years. The return is similar for men and women, and highest for individuals with academic education. Only a small part of the return can be explained by higher probability to have a supervisory position.