Class Size, Teacher Pay, and Student Performance

Abstract

Research showed that US education had fallen behind in global competition. To enhance American competitiveness, this study explored two ways to improve education in the US through a cross-country study of education systems in 40 countries. Specifically, this study focused on two important determinants of students’ academic performance: class size and teacher quality. This was the first study that used the latest Program for International Student Assessment data to examine the relationship between teacher pay and students’ academic performance in a cross-country context. A rigorous empirical analysis showed that while teacher pay had positive, statistically significant and large effects on students’ academic performance, class size had no significant effects. Based on this evidence, this study recommended that US government should spend its limited financial resources raising teacher pay. Such a policy would improve the teacher quality and students’ academic performance in the US, which would in turn enhance American competitiveness.