The Supply of Public School Teachers in the United States: A Study in Human Capital Theory

This study uses the principles of human capital theory to develop and test a theory of a supply of a class of educated manpower services with special reference to school teachers. In the theory formulation, the determinants of the existing stock of teacher education capital are first identified. These are : (a) the price per man-year of teaching service, WTS, (b) the rate of interest, r, (c) the price of the human capital already embodied in the individual working for a college degree in teacher education, WCS, and (d) private costs of education such as foregone earnings and tuition fees, FERTN. The stock function is then expressed in terms of a partial adjustment model and then finally transformed into a supply function for s flow of teacher services by assuming a constant rate of flow of services from each unit of education stock. Finally, the model is made logically complete by specifying s demand function for teachers by the nation\u27s public school systems. This function which is derived by the application of traditional factor demand theory to the production of public education states that the demand for teachers depends on the price per man-year of teaching services, WTS, the prices of other educational inputs such as the services of supporting instructional personnel, the services of custodial workers, the services of physical facilities, and the exogenously determined level of output which is assumed here as being measured by the average daily attendance or ADA. To test the model its parameters are estimated by using the methods of ordinary least squares (OLS) and the two-stage least squares (2SLS). The use of the OLS method yields acceptable results for the supply equation only. On the other hand the use of the 2SLS method results in estimates that agree with all theoretical considerations in both the supply and demand functions. In view of the superiority of 2SLS in a simultaneous equation context, it is concluded that the estimates of the parameters resulting from it are more reliable. On the basis of these improved estimates the following observations and/or conclusions are made: (a) A human capital approach to the study of the factors affect ing the supply of a special class of educated manpower services is capable of explaining the realities of the school teacher market , (b) Of the four determinants identified, only the price of teacher services, WTS, and the private cost of education consisting of foregone earnings and tuition fees, FERTN, seem to be significant, and (c) The supply of teachers is relatively elastic with respect to t he price of its services. These findings provide strong support for existing or planned policies possessing the following features: (a) A highly competitive salary structure, (b) A flexible teacher education grants program, and (c) Measures designed to ease the teacher supply-demand adjustment process. During shortages, these measures may include among others reconsideration of teacher credential requirements and better use of manpower. Up-to-date information on current and prospective teacher market situations, career counselling and voluntary limitations on student admissions by teacher education institutions would also help prevent the development of teacher manpower surpluses . The first two features should help assure s sufficient supply of the desired quality and quantity of teachers and the last one is expected to speed up the attainment of supply-demand equilibrium