Hostname: page-component-758b78586c-qzq9q Total loading time: 0 Render date: 2023-11-28T11:32:17.441Z Has data issue: false Feature Flags: { "corePageComponentGetUserInfoFromSharedSession": true, "coreDisableEcommerce": false, "useRatesEcommerce": true } hasContentIssue false

The Rate of Return to Teaching: How does it Compare to other Graduate Jobs?

Published online by Cambridge University Press:  26 March 2020

Peter Dolton*
Centre for Economic Performance, London School of Economics
Tsung-Ping Chung
Centre for Economic Performance, London School of Economics


The problem of recruiting graduates into the teaching profession and retaining them has bedevilled recent UK governments. An obvious question to ask is why is teaching so relatively unattractive for graduates. This paper presents a careful analysis of this problem. We compare the earnings of qualified teachers who choose to teach with the ‘opportunity wage’ for those who do not teach. We find that the ‘rate of return on career choice’ for teachers has been declining for both men and women over the past 25 years although teaching is still relatively well paid for women. From our net present value analysis we estimate that males who enter teaching lose, on average, earnings of £40,000 to £67,000 over their lifetime while females could stand to gain average earnings of £42,000 to £65,000 if they opted to become school teachers.

Copyright © 2004 National Institute of Economic and Social Research

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)


Funding from the DfES to the Centre for the Economics of Education is acknowledged.


Bee, M. and Dolton, P. (1995), ‘The remuneration of school teachers: time series and cross-section evidence’, The Manchester School, LXIII, 1, pp. 122.CrossRefGoogle Scholar
Blaug, M. (1970), Introduction to the Economics of Education, The Penguin Press.Google Scholar
Birch, D.W. and Calvert, J.R. (1973), ‘How profitable is teaching?Higher Education Review, 6, 1, pp. 3544.Google Scholar
Chevalier, A., Dolton, P and McIntosh, S. (2001), ‘Recruiting and retaining teachers in the UK: an analysis of graduate occupation choice from the 1960s to the 1990s’, London, Centre for the Economics of Education Discussion Paper Series 21.Google Scholar
Chung, T.P., Dolton, P. and Tremayne, A.R. (2004), ‘The determinants of teacher supply: time series evidence for the UK, 1962-2001’, CEP Working Paper 1311, Centre for Economic Performance, London School of Economics.Google Scholar
Dolton, P. (1990), ‘The economics of UK teacher supply: the graduate's decision’, The Economic Journal, 100, 400, pp. 91104.CrossRefGoogle Scholar
Dolton, P. and Makepeace, G.H. (1993), ‘Female labour force participation and the choice of occupation’, European Economic Review, 37, 7, pp. 1393–411.CrossRefGoogle Scholar
Dolton, P., Makepeace, G.H. and Van Der Klaauw, W. (1989), ‘Occupational choice and earnings determination: the role of sample selection and non-pecuniary factors’, Oxford Economic Papers, 41, pp. 573–94.CrossRefGoogle Scholar
Dolton, P. and Mavromaras, K. (1994), ‘Intergenerational occupational choice comparisons: the case of teachers in the UK’, Economic Journal, 104, pp. 841–63.CrossRefGoogle Scholar
Dolton, P. and van der Klaauw, W. (1995a), ‘Leaving teaching in the UK - a duration analysis’, Economic Journal, 105, 429, pp. 431444.CrossRefGoogle Scholar
Dolton, P. and van der Klaauw, W. (1995b), ‘Teaching salaries and teacher retention’, in Baumol, W. (ed.), Teaching salaries and teacher retention, Cambridge MA, MIT Press.Google Scholar
Dolton, P. and van der Klaauw, W. (1999), ‘The turnover of teachers: a competing risks explanation’, Review of Economics and Statistics, 81, 3, pp. 543–50.CrossRefGoogle Scholar
Flyer, F. and Rosen, S. (1997), ‘The new economics of teachers and education’, Journal of Labor Economics, 15, S10439.CrossRefGoogle Scholar
HMSO (1987), ‘School teacher's pay and conditions document 1987’, London, HMSO.Google Scholar
HMSO (1993), ‘School teacher's pay and conditions document 1993’, London, HMSO.Google Scholar
Mason, G. (1996), ‘Graduate utilisation in British industry: the initial impact of mass higher education’, National Institute Economic Review, 171, pp. 93103.CrossRefGoogle Scholar
Nickell, S. and Quintini, G. (2002), ‘The consequences of the decline in public sector pay in Britain: a little bit of evidence’, Economic Journal, 112, February, pp. F10718.CrossRefGoogle Scholar
Psacharopoulos, G. (1994), ‘Returns to investment in education: a global update’, World Development, 22, 9, pp. 1325–43.CrossRefGoogle Scholar
Ross, A. and Hutchings, M. (2003), ‘OECD country background report for the UK’, Report to the OECD, Paris.Google Scholar
Smithers, A. and Robinson, P. (2003), ‘Factors affecting teachers’ decisions to leave the profession’, Research Report RR430, London, Department for Education and Skills.Google Scholar
Wilson, R.A. (1980), ‘The rate of return to becoming a qualified scientist or engineer in Great Britain, 1966-1976’, Scottish Journal of Political Economy, 27, 1, pp. 4162.CrossRefGoogle Scholar
Wilson, R.A. (1983a), ‘The declining return to becoming a teacher’, Higher Education Review, 15, 3, pp. 2237.Google Scholar
Wilson, R.A. (1983b), ‘Rates of return: some further results’, Scottish Journal of Political Economy, 30, 2, pp. 114–27.CrossRefGoogle Scholar