The bargaining power of teachers' unions and the allocation of school resources

This paper examines how district size affects the bargaining power of teachers' unions and the allocation of school resources. Our identification strategy exploits the fact that 33 states mandate collective bargaining while 5 states prohibited it. In states that mandate collective bargaining, we find that beginning salaries and the premium paid to experienced teachers increase with district size while the teacher-pupil ratio declines with district size. In contrast, in states that prohibit collective bargaining we find a negative relationship between district size and the premium paid to experienced teachers. District size also has a stronger positive effect on beginning salaries and a weaker negative effect on teacher-pupil ratios in states that prohibit collective bargaining. Collectively, our results suggest that more powerful unions bargain for more generous returns to teacher seniority at the expense of staffing ratios and base salaries. (C) 2013 Elsevier Inc. All rights reserved.