Teacher career opportunities and school quality

We study the effects of introducing a performance-based promotion program for teachers in Sweden. The program intended to make the teaching profession more attractive by raising wages for skilled teachers and taking advantage of teachers' professional competence. Our results show that: (i) high-wage, high-ability teachers are more likely to be promoted; (ii) the stipulated wage increase has full pass-through onto wages for promoted teachers; (iii) schools with promotions have lower teacher separations and an improved pool of teachers; (iv) the promotion program improved student performance. These results suggest that performance-based promotions could be an important tool for raising school quality.