Welcome to the Profit of Education website. Continuing the conversation begun in the book Profit of Education, we discuss the latest economic evidence on education reform.

Dumping tenure to grow the economy?

Suppose that the Vergara decision and its aftermath were to lead to the entire country replacing the worst two percent of teachers with average teachers? It’s pretty clear that students who benefited from the teacher upgrade would end up with higher wages when they enter the work force? How much is that worth?

Let’s begin with the idea that really bad teachers do incredible damage. (This is a good place to stop to remind everyone that really great teachers do incredible good.) Suppose that the effect of having really bad teachers for a kid’s K-12 experience is that he never earns a penny for his entire life. And suppose that if the same kid had average teachers throughout he would earn an average income. This would seem to over-estimate the teacher effect, but let’s go with it.

Median income in the United States is around $30,000 per year. There are around 160 million workers. So $30,000 times 160 million times 2 percent is just about 100 billion a year. That’s real money, but it’s not a giant slice out of our huge economy. (It’s a bit over half a percent of GDP.) And I suspect this estimate is an upper bound.

Two caveats:

  1. Maybe we’ll get reforms following Vergara that help more than just the bottom few percent. If so, the effect could be enormously larger.
  2. Rick Hanushek, who is arguably the dean of education economists, has argued that the effect of Vergara might be in the trillions rather than in the billions. Hanushek’s analysis relies on school reform raising the rate of economic growth. This requires faster technological progress. Because new technology isn’t created by people at the bottom end of the educational ladder, his argument doesn’t seem to apply to a reform focused on helping those on the bottom rungs. So I’ll stick with the billions number.
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