Paper · Work in Progress · 2018

Carrots and Sticks for Teacher Colleges: The Equilibrium Design of Teacher Recruitment Policy

Chile

Abstract

We study the joint design of subsidies and standards in the market for teacher training. Chile's Beca Vocación de Profesor paired a carrot, free tuition for students who score above a college-admission-test threshold and enroll in a teacher (pedagogy) college, with a stick that barred participating colleges from admitting students below a minimum score. State colleges were mandated into the program while private colleges chose whether to adopt, and we use this mandate asymmetry for identification. Combining the universe of test takers with enrollment records that cover every higher-education institution, we document sharp demand responses at both thresholds, a rise of roughly one half in the share of high-scoring students entering teaching, and steep selection into adoption: private colleges whose students mostly cleared the floor join at high rates, while those serving lower-scoring students largely stay out and keep enrolling them. We build and estimate an equilibrium model in which students choose programs and outside options and colleges choose whether to participate. The model reproduces the reduced-form discontinuities and, applied to the pre-policy baseline, predicts the treated cohort out of sample. We then solve the policymaker's problem of setting the two thresholds to maximize the average admission score of entering teachers subject to a scholarship budget. The stick turns out to be an adoption tax with an interior optimum: a higher floor upgrades the intake of colleges that stay in but drives marginal colleges out, and their would-be students re-sort into the less selective sector outside the program, so its net effect on quality is ambiguous and depends on how much of the market can exit. The carrot, whose pull weakens as scores rise and outside options improve, buys teacher quantity far more readily than quality. A modest floor is the cost-effective quality lever, while the carrot's main role is to sustain the supply of teachers; at its own budget the reform Chile actually chose sits close to the efficient frontier.

Citation & BibTeX

Adam Kapor, Christopher A. Neilson, Cristian Sanchez, "Carrots and Sticks for Teacher Colleges: The Equilibrium Design of Teacher Recruitment Policy", 2018.

Teacher quality and recruitment

Few inputs matter more for what students learn than the quality of their teachers, and governments everywhere look for ways to raise it. Most policy attention goes to teachers already in the classroom — how they are paid, trained, and evaluated — but one of the most direct levers acts earlier, at recruitment: changing who enters the profession in the first place. In many countries the academic profile of those entering teacher training sits well below that of other professional fields. Raising the initial human capital of new teachers — the academic preparation and skill they bring on day one — is one concrete way to strengthen the teaching workforce over time, and it is the margin this paper is about. The question is how to design a policy that does it.

The reform

In 2011 Chile launched the Beca Vocación de Profesor (BVP) to do exactly that. It combined two instruments that are usually studied in isolation. The carrot offered free tuition — and, for the very highest scorers, a monthly stipend — to students who scored above a threshold on the national college-admission test (PSU) and enrolled in an eligible teacher-college (pedagogy) program. The stick prohibited participating programs from admitting any student who scored below a lower floor. Crucially, the state-owned colleges were required to take part, while the large private sector could choose whether to opt in — an asymmetry we rely on throughout the analysis.

What we do

We assemble administrative records linking the universe of PSU takers to first-year enrollment at every higher-education institution, inside and outside the centralized admission system, and use them to document the reduced-form anatomy of the reform on both sides of the market. We then build and estimate an equilibrium model in which students choose among programs and outside options and each college decides whether to adopt the program. The model reproduces the sharp behavioral responses at the two thresholds and, when its estimated policy effect is applied to the pre-policy cohort, predicts the post-reform enrollment curve out of sample. We then use it to ask how a policymaker should set the carrot cutoff and the stick floor to obtain the most teacher quality per scholarship dollar.

How the carrot and the stick work

Start with the stick. Bar a participating college from admitting anyone below a score floor and, on impact, the effect looks unambiguously good: the weakest applicants can no longer enter, so the average score of new teachers rises and standards climb — at the cost of fewer entrants overall. But the floor binds only where a college has chosen to participate, and raising it makes participation less attractive to precisely the colleges whose students cluster near or below the cutoff. Some of them respond by leaving the program altogether — and, no longer bound by the floor, go on to admit students scoring well below the level they would have accepted inside it. The net effect on the quality of the teaching workforce is therefore ambiguous: a higher floor lifts quality inside the program while pushing students, and whole colleges, into a less selective sector outside it.

The carrot works through desirability. A tuition scholarship makes teaching more financially attractive and draws students in — but its pull fades as scores rise, because the strongest students already have ever-better alternatives, in fields like engineering, medicine, and law, that a subsidy does little to offset. Raising the scholarship cutoff — making the carrot stingier — does three things at once: it lowers the program’s fiscal cost, it reaches fewer students, and, importantly, it makes the carrot nearly irrelevant to colleges that would not attract high-scoring students even with free tuition on the table. How much a college values the carrot thus depends on whether its applicants are the kind the carrot can actually move.

The college’s decision, in equilibrium

Put the two instruments together and a college’s decision to join the program becomes genuinely strategic. Adopting makes a college more desirable to every student above the floor, and far more desirable to those above the scholarship cutoff, who can now attend for free. But adoption is also a commitment to turn away everyone below the floor — and that trade-off ripples through the market. When a rival teacher college adopts, it pulls high scorers toward itself; yet by giving up the low-scoring students, it also eases the competition for them, leaving that segment to the colleges that stay out. Each college therefore weighs the carrot’s draw at the top against the students it must surrender at the bottom, and the right answer depends on its own applicant pool and on what its competitors decide to do. It is the equilibrium of these interlocking participation choices — not the thresholds written into the law — that determines what the policy ultimately achieves, and it is what our model is built to capture.

What we find

  • The stick is an adoption tax with an interior optimum. Because tightening the floor both upgrades the colleges that stay in and pushes others out, average teacher quality rises with the floor only up to a point and then turns over — past a moderate level, a stricter standard begins to lower quality rather than raise it. Where that turning point lies depends on how much of the market is free to exit.
  • The carrot buys quantity, not quality. Since its pull is weakest exactly where added quality would have to come from — the top of the score distribution — extra scholarship spending expands the number of new teachers far more than it raises their average score.
  • A modest stick is the cost-effective quality lever. The floor raises quality at little fiscal cost up to its turning point, while the carrot’s job is to buy back the teachers that the floor costs. At its own budget, the reform Chile actually chose sits close to the efficient quality–quantity frontier.

Why it matters

Scholarships and admission standards are the tools governments most often reach for to improve who teaches, and both usually treat the colleges that train teachers as a passive pipeline. Our results show that when participation in a standard is voluntary, the standard’s effect on quality is shaped by which providers can walk away — so the same rule can raise quality or backfire depending on the structure of the market. Designing teacher-recruitment policy therefore means designing the incentives of the training providers, not just those of the students.