Smaller Classes, Lower Salaries? The Effects of Class Size on Teacher Labor Markets

Eric A. Hanushek, Javier Luque
Published Date: 
In Sabrina W.M. Laine and James G. Ward (ed.)
Using What We Know: A Review of the Research on Implementing Class-Size Reduction Initiatives for State and Local Policymakers
Oak Brook, Ill.: North Central Regional Educational Laboratory
pp. 35-51

In recent years, the effects of changes in class size have been the focus of intense discussions among education policymakers. Much of the debate has centered on the relationship between class size and student performance, as researchers attempt to study the effects of reducing class sizes and to interpret the results from a policy perspective. However, the existing research generally neglects the overall effects of smaller class sizes on teachers. Current literature tends to concentrate on teaching techniques, such as classroom management and time on-task, to which achievement gains can largely be attributed. But how does class size affect overall teacher satisfaction? Do teachers simply enjoy their jobs more when their classes are smaller? If so, how does that affect teacher salaries and the labor market?
This analysis suggests that class size has a small but noticeable effect on the salaries paid by school districts. All things being equal, a decrease of class size by one student is associated with teachers' salaries that are 1 to 2 percent lower. Thus, for example, a class-size reduction policy of three to four students across the board could lower the necessary payments for teacher salaries by some 5 percent. If teacher salaries are half of the cost of a district's operations, this could amount to a 10- to 15-percent offset to the class-size reduction policy. This study, however, suggests that this effect may differ across regions of the country and across geographic locations within states (i.e., central city, urban, suburban, and rural). The latter estimates are, however, prone to considerable uncertainty.