Using Performance on the Job The Hamilton Project seeks to advance America’s promise of opportunity, prosperity, and growth. The Project’s economic strategy reflects a judgment that long-term prosperity is best achieved by making economic growth broad-based, by enhancing individual economic security, and by embracing a role for effective government in making needed public investments. Our strategy—strikingly different from the theories driving current economic policy—calls for fiscal discipline and for increased public investment in key growthenhancing areas. The Project will put forward innovative policy ideas from leading economic thinkers throughout the United States—ideas based on experience and evidence, not ideology and doctrine—to introduce new, sometimes controversial, policy options into the national debate with the goal of improving our country’s economic policy. The Project is named after Alexander Hamilton, the nation’s first treasury secretary, who laid the foundation for the modern American economy. Consistent with the guiding principles of the Project, Hamilton stood for sound fiscal policy, believed that broad-based opportunity for advancement would drive American economic growth, and recognized that “prudent aids and encouragements on the part of government ” are necessary to enhance and guide market forces.

This paper explores a little-understood aspect of labor markets, their spatial geography. Using data from New York State, we find teacher labor markets to be geographically very small. Teachers express preferences to teach close to where they grew up and, controlling for proximity, they prefer areas with characteristics similar to their hometown. We discuss implications of these preferences for the successful recruitment of teachers, including the potential benefits of local recruiting and training. We also discuss implications for the modeling of teacher labor markets, including the possible biases that arise in estimates of compensating differentials when distance is omitted from the analyses. This study contributes to the literature on the geography of labor markets more generally by employing data on residential location during childhood instead of current residence, which may be endogenous to job choice. © 2005 by the Association for Public Policy Analysis and Management

This work has been supported by a grant from the National Science Foundation. The authors wish to thank participants of the “Teachers and Low Performing Schools ” panel at the November, 2001 APPAM Conference in Washington, D.C., as well as those participants of the University of Maryland Labor and Public Finance seminar, for their helpful comments and suggestions. Changing Labor Market Opportunities for Women

graciously sponsored the survey, and Briggs McAndrews at NYSCOSS provided significant help with all aspects of the survey. Deborah Cunningham, Charles Szuberla, Johanna Duncan-Poitier, Nancy Willie-Schiff, and Joe Porter of the New York State Education Department (SED) reviewed the survey and provided helpful comments. Brenda Budka at SED provided the teacher certification data, and patiently answered our many questions about this data. Dan Goldhaber and Michael DeArmond of the University of Washington had a number of valuable suggestions on both the content and design of the survey. Willow Jacobson at the University of North Carolina, Pat Ingraham at Syracuse University, and Mark Robbins and Bill Simonsen, at the University of Connecticut, critiqued the survey instrument, and proposed a number of revisions to reduce length and improve clarity. We also want to thank Jeff McLellan, Kim Kirsch, and Bob Bifulco for their comments on preliminary draft of the report. We appreciate the willingness of Robert Strauss of Carnegie Mellon University to allow us to borrow from his survey on teacher hiring practices in Pennsylvania. Errors and omissions are, of course, solely the responsibility of the authors.

I investigate the importance of the match between teachers and schools for student achievement. I show that teacher effectiveness increases after a move to a different school, and I estimate teacher-school match effects using a mixedeffects estimator. Match quality can "explain away " a quarter of, and is as economically important as, teacher quality. Match quality is negatively correlated with turnover, and increases with experience. This paper provides the first estimates of worker-firm match quality using output data as opposed to inferring productivity from wages or employment durations. Because teacher wages are essentially unrelated to productivity, this is the compelling evidence that workers may seek high quality matches for reasons other than higher pay. The productive quality of the match between a worker and the firm plays a central role in canonical models of worker mobility (Jovanovic 1979, Mincer and Jovanovic 1981, Neal 1999, Burdett 1978, Mortensen 1998, Johnson 1978). One of the key roles of the labor market is to allocate workers to firms in the most efficient manner. The hypothesized mechanism through which this efficient allocation emerges is through workers either leaving jobs where the productivity match between the worker and the firm is low or seeking jobs where match quality is high, or both. Match quality is also used to explain the stylized facts that changing jobs is associated with rapid earnings growth (Bartel and Borjas 1981, Altonji and Shakotko 1987,

School districts are confronting difficult choices in the aftermath of the financial crisis. In prior recessions, districts often muddled through by imposing a combination of tax increases and expenditure cuts that avoided involuntary personnel reductions. Today, the financial imbalance in many school districts is so large that there is no alternative to teacher layoffs. In nearly all school districts, layoffs are currently determined by some version of teacher seniority. Yet, alternative approaches to personnel reductions may substantially reduce the harm to students from staff reductions relative to layoffs based on seniority. First, because salaries of novice teachers are often much lower than those of veteran teachers, senioritybased layoffs lead to more teachers being laid off to

the New York State Board of Regents, and education scholars, researchers and policymakers from New York and around the country. By bringing education researchers together with policymakers, the Consortium seeks to address critical questions about the state of public education in New York. The Consortium’s mission is to foster an exchange of information and ideas that informs education policy decisions, assist education policy decision-makers in identifying issues that require initial or further study, and produce quality and timely research that contributes to the development of sound education policy. The Consortium is housed in the Center for Policy Research, Rockefeller College of Public Affairs & Policy, University at Albany – SUNY. Condition reports are written using education data compiled by New York State agencies and from data independently collected by the researchers. Consortium researchers work closely with agency staff to identify and analyze trends in school district spending, school staffing and student performance. The condition reports describe various characteristics of New York State's public school systems and also identify potential areas for further study.

Acknowledgements: This project would not have been possible without significant help from a number of

This work has been supported by a grant from the National Science Foundation. The authors wish to thank participants of the “Teachers and Low Performing Schools ” panel at the November, 2001 APPAM Conference in Washington, D.C., as well as those participants of the University of Maryland Labor and Public Finance seminar, for their helpful comments and suggestions. The views expressed herein are those of the authors and not necessarily those of the National Bureau of Economic Research.

Our report benefited from the willingness of several people formerly and currently associated with the Berkeley Unified School District to answer our questions and provide information. They include: Marie Joiner; Michele Lawrence; Melisandra Leonardos; Francisco Martinez; and Bruce Wicinas. They are not responsible for any of the conclusions or analysis in this report. We appreciate the feedback from the presentation of our findings from participants in the Berkeley Law School Research Center and