Title: "School Funding, Teacher's Labor Market, and Student Outcomes".
Abstract:
This paper examines the role of school funding mechanisms on determining teacher employment and compensation, and student achievement using a structural equilibrium model. We analyze how variations in school funding policies in Texas affect teacher wages, labor supply, and educational outcomes. We find that the recapture policy-a policy that transfers excess property tax revenue from rich to poor school districts- is crucial in balancing educational resources, influencing both the quantity and quality of teachers, and impacting student achievement. Counterfactual simulations reveal that eliminating the recapture policy allows wealthier districts to offer higher wages and attract more teachers but may lower average teacher quality due to an influx of less-skilled individuals. Less affluent districts face budget reductions and reduced teaching resources but could experience an increase in average teaching quality. Our findings highlight important trade-offs in policy design regarding funding redistribution and educational equity.