The Economic Value of Higher Teacher Quality

Most analyses of teacher quality end without any assessment of the economic value of altered teacher quality. This paper begins with an overview of what is known about the relationship between teacher quality and student achievement. Alternative valuation methods are based on the impact of increased achievement on individual earnings and on the impact of low teacher effectiveness on economic growth through aggregate achievement. 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. 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.