Private school competition and public school teacher salaries

Teacher unions have fiercely fought public policy measures (e.g., vouchers, tuition tax credits) that might increase the proportion of students attending private schools. Yet increased competition in the educational service market should also lead to greater labor market competition, reducing any quasi-monopsony tendencies depressing teacher salaries. Using detailed data on over 600 Ohio school districts, we find that increased private school competition leads to higher salaries for public school teachers. It may be that union leaders disregard the interests of their members in trying to maximizing union size and power. An alternative interpretation is that unions sacrifice shortrun income gains for their members in order to maintain longterm economic rents associated with substantial political power.