The purpose of this paper is to investigate how the quality of teachers based on education and training provided under new reform policies in Malaysia affects their earnings outcomes. The study conducted a benefit and returns analysis guided by human capital theory.
The study used survey research methods to investigate human capital formation in the teaching profession using teachers’ qualifications, benefits and private rate of returns as key variables in the estimation.
Earnings and experience levels were highly correlated with teachers’ education levels, as suggested by human capital theory. The private rate of returns in earnings for each additional year of schooling of teachers was found to lie between 3 and 4 per cent per year. Discrepancies were apparent in teachers’ qualifications and licensure levels regionally and at academic levels, as expected. These correlated with earning levels.
Improvements in teachers’ salary and employment opportunities will attract higher quality graduates to the teaching profession. Teachers’ annual earnings in Malaysia are comparable to other public sector and private professional jobs in the nation but lag far behind those of the world’s top education systems. Increasing teachers’ earnings will attract better qualified teachers. Policymakers could address these issues.
This paper demonstrates the utility of economic analyses in terms of earnings returns, to evaluate the Malaysian policy of upgrading teachers’ qualifications as a mechanism to improve the overall quality of schooling. Such studies are rare but needed to understand the benefits and returns of policy-driven teacher education and training investments. This study provides new evidence of schooling returns using a recent, national data set.
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