Wages, teacher recruitment, and student achievement

I exploit a benefit program in disadvantaged schools in the city of Oslo to estimate the effect of increased wages in primary and secondary education. The program's main content was a wage increase of about 5%. Using a difference-in-differences approach, I study whether the program led to a change the characteristics of newly hired teachers in terms of educational background and academic achievement, and estimate student achievement effects to discuss teacher selection by effectiveness. I find positive effects on the probability of hiring teachers with a master's degree. There are no changes in other observable characteristics. Improved student achievement indicates positive selection effects also in terms of teacher effectiveness after the reform.