Spatial explanations for deferred teacher compensation: Unions and competition for teachers

Teacher compensation is often deferred until late in teachers’ careers. Concerns about teacher shortages have raised concerns that backloading compensation in this way is inefficient. However, existing theoretical and empirical work does not clearly explain why these compensation structures often persist. Using detailed longitudinal teacher compensation data and spatial autoregressive models, I test two of the most common explanations for deferred teacher compensation. I find little evidence that school districts strategically frontload compensation to compete for teachers. However, I find evidence consistent with deferred compensation resulting at least in part from the influence of teachers’ unions.