The issue of whether or not teachers (or, more specifically, good teachers) are underpaid is the subject of much debate in both education and politics. Economists are quick to point out that, in competitive labor markets, workers are paid their marginal product of labor- in other words, how much extra value they create. The market for teachers is not a competitive labor market for various reasons, but it would be nice to know nonetheless what the value-add for a good teacher is so that policymakers could examine whether teacher compensation is at least in the right ballpark.
Economists are more than happy to take up this cause, and a few of them have come up with some interesting findings recently. Raj Chetty and John N. Friedman of Harvard University and Jonah E. Rockoff of Columbia University have found that, for fourth graders, having a good teacher adds, on average $25,000 in lifetime earnings per student. If a fourth-grade teacher has 30 students, then her impact on her students' total earnings (assuming she is in the "good category") is, on average, $750,000. This marginal product of labor, however, is at least an order of magnitude higher than even the highest teacher salaries, so it's worth thinking twice next time someone implies that the lack of competitive labor markets in education works to benefit the teachers.
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