Be Sure to Thank Me After You Make That First Million!! The link at the end of the article is very interesting as well.

December 21, 2010, 1:54 pm

When Good Teaching Pays Off

By CATHERINE RAMPELL

Earlier this year my colleague David Leonhardt wrote about a new study that found that a good kindergarten teacher can drastically improve students’ future earnings. On that basis, an especially strong kindergarten teacher is arguably worth about $320,000 a year, which is the present value of the additional earnings that a full class of students can expect to earn over their careers.
Now another working paper, by Stanford’s Eric A. Hanushek, gets similar results, arguing that a minor improvement in teacher quality could have dramatic effects on test scores, especially as they compare to those of other countries. From the abstract:

A teacher one standard deviation above the mean effectiveness annually generates marginal gains of over $400,000 in present value of student future earnings with a class size of 20 and proportionately higher with larger class sizes. Alternatively, replacing the bottom 5-8 percent of teachers with average teachers could move the U.S. near the top of international math and science rankings with a present value of $100 trillion.

So does that justify paying teachers more money? Only if pay can be directly linked to effectiveness, Mr. Hanushek writes, a task our educational system has not yet been able to master:

This paper has concentrated on the demand side of the teacher labor market. The underlying idea is that knowing the impact of teacher quality on economic outcomes provides immediate information about what kind of rational changes in teacher incentives and salaries are economically desirable.
Unfortunately, we know little about the supply function for teacher quality. Thus, it is not possible to predict what kinds of pay changes would be needed to ensure any given quality of teacher force.
The standard arguments for performance pay suggest the potential value of differential pay based on effectiveness in the classroom. We actually have little empirical evidence about how to structure any such pay systems or about what the effects might be. The evidence presented in this paper simply suggests that the economically appropriate rewards for particularly effective teachers in the context of a performance pay plan could be very large.

For more on the relationship — or lack thereof — between education spending and student outcomes, see this post on the latest PISA scores.  source:  nyt.com