Teacher Labor Markets, School Competition, and Educational Outcomes- Evidence from Chile

This dissertation examines three reforms impacting teacher labor markets in Chile to shed light on how teacher labor markets influence educational outcomes in a context of school competition. The first chapter measures the impact of increased employment protection for teachers in public schools, focusing on a policy change that granted permanent status to some temporary teachers based on seniority. Employing a difference-in-differences approach, the study finds a significant increase in teacher retention following the policy implementation. The retention effects are particularly salient in schools with lower family incomes and higher levels of school competition, which had previously experienced higher teacher turnover rates. The policy is associated with an immediate negative effect on students' test scores. Yet, the decline in performance is primarily observed among teachers in high socioeconomic status schools. The second chapter investigates the effects of two bonus retirement policies targeted at public school teachers in Chile. Utilizing a difference-in-discontinuities approach, the study reveals that these retirement bonus initiatives significantly increase the likelihood of teachers leaving the school near the eligibility cutoff, even two years after the policy implementation. The departure of bonus-eligible teachers led to substantial vacancies, mainly filled by less experienced teachers under temporary contracts. Over the post-implementation period, an increase in teachers rated as low-performing is observed, predominantly driven by new teachers, as well as a decline in standardized test scores- particularly associated with one of the bonus policies. The study identifies heterogeneity effects on test scores, with low socioeconomic status schools in more competitive areas showing no decline in test performance. The third chapter explores whether the returns of school competition were more pronounced following the adoption of a full-day school (FDS) reform. Using an event study analysis and leveraging the gradual adoption of the FDS reform, the study investigates how institutional differences and the level of school competition influence the expansion of school inputs. The study also uses municipal exposure to FDS, finding that the increases in test scores associated with FDS adoption are more pronounced in areas characterized by higher levels of school competition. Lower returns to FDS adoption are estimated in areas with a higher concentration of lower socioeconomic status (SES) students and when adjacent communities also adopt the reform.