Much research in recent years has focused on potential gains to education from replacing low-performing teachers or otherwise reassigning teachers to different schools. However, reassigning teachers to achieve allocative gains is not easy because teachers care about where they teach, and they have some power in determining at which schools they are employed. Teacher preferences, in other words, may not align with optimal productivity.

This paper explores the potential student achievement gains from within-district teacher reassignment and the effectiveness of combinations of different policy levers in achieving these gains. To conduct their analysis, the authors employ an equilibrium model of the teacher labor market combined with novel data on job vacancies and applications. These data come from the job application system of a school district in North Carolina and include the timing of all teacher applications to open vacancies and the outcome of each application (including whether the teacher was hired and whether the hiring principal rated the application positively). Importantly, the authors also link the applicant data to the classroom assignment and student achievement data in North Carolina. Finally, the data also allow the authors to characterize each teacher’s value-added, and to estimate the joint distribution of preferences and value-added.
The authors find the following:

What does this mean for policymakers? In a system where everyone gets paid on the same salary scale, teacher bonuses are the primary policy tool for realizing achievement gains because they align teacher and district preferences. But the optimal form of bonuses depends on how principals value teachers. Flexible prices (or salaries), though, would produce achievement gains at a much lower cost. While authors find that district teacher value-added is relatively balanced across student types, their data and framework could be useful in designing policies that go beyond equalizing achievement gains to try to close baseline gaps.