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The types of workers recruited into teaching and their allocation across classrooms can greatly influence a country's stock of human capital. This paper considers how markets and non-market institutions determine the quantity, wages, skills, and spatial distribution of teachers in developing countries. Schools are a major source of employment in developing countries, particularly for women and professionals. Teacher compensation is also a large share of public budgets. Teacher labor markets in developing countries are likely to grow further as teacher quality becomes a greater focus of education policy, including under the United Nations Sustainable Development Goals. Theoretical approaches to teacher labor markets have emphasized the role of non-market institutions, such as government and unions, and other frictions in teacher employment and wages. The evidence supports the existence and importance of such frictions in how teacher labor markets function. In many countries, large gaps in pay and quality exist between teachers and other professionals; teachers in public and private schools; teachers on permanent and temporary contracts; and teachers in urban and rural areas. Teacher supply increases with wages, though teacher quality does not necessarily increase. However, most evidence comes from studies of short-term effects among existing teachers. Evidence on effects in the long-term, on the supply of new teachers, or on changes in non-pecuniary compensation is scarcer.

The types of workers recruited into teaching and their allocation across classrooms can greatly influence a country's stock of human capital. This paper considers how markets and non-market institutions determine the quantity, wages, skills, and spatial distribution of teachers in developing countries. Schools are a major source of employment in developing countries, particularly for women and professionals. Teacher compensation is also a large share of public budgets. Teacher labor markets in developing countries are likely to grow further as teacher quality becomes a greater focus of education policy, including under the United Nations Sustainable Development Goals. Theoretical approaches to teacher labor markets have emphasized the role of non-market institutions, such as government and unions, and other frictions in teacher employment and wages. The evidence supports the existence and importance of such frictions in how teacher labor markets function. In many countries, large gaps in pay and quality exist between teachers and other professionals; teachers in public and private schools; teachers on permanent and temporary contracts; and teachers in urban and rural areas. Teacher supply increases with wages, though teacher quality does not necessarily increase. However, most evidence comes from studies of short-term effects among existing teachers. Evidence on effects in the long-term, on the supply of new teachers, or on changes in non-pecuniary compensation is scarcer.

Prepared by the Institute of international working-class movement, Soviet academy of sciences.

Emiliana Vegas surveys strategies used by the world's developing countries to fill their classrooms with qualified teachers. With their low quality of education and wide gaps in student outcomes, schools in developing countries strongly resemble hard-to-staff urban U.S. schools. Their experience with reform may thus provide insights for U.S. policymakers. Severe budget constraints and a lack of teacher training capacity have pushed developing nations to try a wide variety of reforms, including using part-time or assistant teachers, experimenting with pay incentives, and using school-based management. The strategy of hiring teachers with less than full credentials has had mixed results. One successful program in India hired young women who lacked teaching certificates to teach basic literacy and numeracy skills to children whose skills were seriously lagging. After two years, student learning increased, with the highest gains among the least able students. As in the United States, says Vegas, teaching quality and student achievement in the developing world are sensitive to teacher compensation. As average teacher salaries in Chile more than doubled over the past decade, higher-quality students entered teacher education programs. And when Brazil increased educational funding and distributed resources more equitably, school enrollment increased and the gap in student test scores narrowed. Experiments with performance-based pay have had mixed results. In Bolivia a bonus for teaching in rural areas failed to produce higher-quality teachers. And in Mexico a system to reward teachers for improved student outcomes failed to change teacher performance. But Vegas explains that the design of teacher incentives is critical. Effective incentive schemes must be tightly coupled with desired behaviors and generous enough to give teachers a reason to make the extra effort. School-based management reforms give decisionmaking authority to the schools. Such reforms in Central America have reduced teacher absenteeism, increased teacher work hours, increased homework assignments, and improved parent-teacher relationships. These changes, says Vegas, are especially promising in schools where educational quality is low.

Governments regulate employment to protect workers and improve labor market efficiency. But, regulations, such as minimum wages and job security rules, can be controversial. Thus, decisions on setting employment regulations should be based on empirical evidence of their likely impacts. Research suggests that most countries set regulations in the appropriate range. But this is not always the case and it can be costly when countries over- or underregulate their labor markets. In developing countries, effective regulation also depends on enforcement and education policies that will increase compliance.