When the Walls Come Down: Evidence on Charter Schools’ Ability to Keep Their Best Teachers Without Unions and Certification Rules

Abstract

Theories of market-based school reform suggest that teacher labor markets may be inefficient, and perhaps inequitable, because union contracts, tenure protections, and government regulation limit school autonomy over hiring, evaluation, compensation, and working conditions. In a less restrictive setting, schools could incentivize performance by selectively retaining and rewarding better-performing teachers. We test this empirically by comparing teacher exits in the deregulated market of New Orleans with exits in neighboring traditional public school districts. Our results suggest that the relationship between teacher performance and retention is stronger in the New Orleans market setting than in similar traditional school districts. We also find positive associations between annual salary increases and performance, but only when teachers transfer from one charter school to another. While teacher retention is more closely tied to performance in New Orleans, this did not yield a net gain in teacher quality, relative to neighbors. New Orleans had much higher teacher turnover, and we find the large numbers of teachers who had to be hired annually in the city had lower value-added than the entrants in comparison districts.