The Economics of Teacher Supply in Indonesia
This paper examines the phenomenon of the over-supply of teachers but shortage of qualified teachers in Indonesia. Using a theoretical framework of government-dominated market with government-set wage rate and demand for teachers, the analysis expl...
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090622091245 http://hdl.handle.net/10986/4167 |
| Summary: | This paper examines the phenomenon of
the over-supply of teachers but shortage of qualified
teachers in Indonesia. Using a theoretical framework of
government-dominated market with government-set wage rate
and demand for teachers, the analysis explores how teacher
supply, particularly the composition of the teaching force
with low or high qualification, would be determined by
current and future public policies. Using 2001 to 2008
Indonesian Labor Force Survey data, the paper further
estimates the potential effect of the most recent teacher
law, which could give college educated teachers a
significant pay increase, on the composition of the
Indonesian teaching force with differentiated education
backgrounds. Using a sample of workers with college
education, the author finds that the relative wage rate of
teachers and that of alternative occupations significantly
influence the decision of college educated workers to become
teachers. It is also found that the wage rate set by the
most recent teacher law would increase the share of teachers
approximately from 16 to 30 percent of the college-educated
labor force. This increase that is due to the new
government-set wage rate, would result in a pupil-teacher
ratio of 24 to 25 pupils per teacher with college education,
but will require a more than 31 percent increase in the wage
bill for teacher salaries. The empirical approach of this
paper is derived from a structural model that takes into
account the endogeneity of the wage rate and corrects for
sample-selection bias due to occupational choice. |
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