Essays on the Economics of Education

This dissertation contains three essays on the economics of education. In chapter 1, I investigate teacher performance under performance pay incentives. Over the last decade many districts have implemented performance pay incentives to reward teachers for improving student test scores. Economic theory suggests that these programs could alter teacher work effort, cooperation, and retention. Because teachers can choose to work in a performance pay district that has characteristics correlated with teacher behavior, I use the distance between a teacher's undergraduate institution and the nearest performance pay district as an instrumental variable. Using data from the 2003 and 2007 waves of the Schools and Staffing Survey (SASS), I find that teachers respond to performance pay incentives by working fewer hours per week at school. Performance pay also decreases participation in unpaid cooperative school activities, while there is suggestive evidence that teacher turnover decreases. The treatment effects are heterogeneous; male teachers respond more positively to performance pay than female teachers. In Florida, which restricts state performance pay funding to individual teachers or teams, I find that work effort and teacher turnover increase.

In chapter 2, I use a restricted use version of the 2007 Schools and Staffing Survey (SASS) to estimate the effect of tenure on teacher behavior and time allocation at school and outside of school. In most states, K-12 teachers receive tenure after serving a probationary period of several years. Teachers with tenure, or a continuing contract, are guaranteed due process before they can be dismissed from their job. Estimates of teacher behavior are obtained by exploiting the cross-state variation in the probationary period length of novice teachers within a difference-in-difference framework. I find that in the year that teachers are evaluated for tenure, they spend significantly more of their own money on classroom materials. Relative to the tenure evaluation year, once teachers receive tenure, they communicate less with students and parents outside of class and participate less in school and district committees. In those districts where at least one probationary teacher is fired, I find that teachers reallocate their teaching time. Immediately after receiving tenure, they spend less time teaching math and more time teaching English.

In chapter 3 (with Richard Jensen), we empirically examine commercialization of university faculty inventions through startup firms from 1994 through 2008. Using data from the Association of University Technology Managers and the 2010 NRC doctoral rankings, our research reveals several findings. We find that university entrepreneurship is more common in bad economic times and that engineering department quality and biological sciences department size are more important after the NASDAQ stock market crash in 2000. We also find that the quality of a biological sciences department is positively associated with startup company activity. Conditional on creating one startup, each additional TTO employee significantly increases university startups.