Research

The Impact of Job Security and Tenure Reforms on Teacher and Student Outcomes

Abstract: Employee retention and productivity are critical for public sectors worldwide, yet countries face significant challenges in attracting and retaining high-quality workers. This paper leverages restricted-access administrative data and Peru’s nationwide education reform, which gave job security to teachers passing a centralized exam, to study the impact of offering job security on teacher retention and performance. Using a regression discontinuity design, I show that exit rates from the profession decrease by 25% for teachers marginally passing the exam compared to failing, with stronger retention effects for higher-quality teachers based on ex-ante value-added measures. Exploiting variation within-students across subjects, I find that students taught by permanent contract teachers experience learning gains of 0.14 standard deviations, with effects concentrated in urban areas. A difference-in-differences analysis finds teacher value-added increases by 7.5% in schools exposed to the reform. Results highlight that test-based job security can be a useful policy tool to improve public sector productivity.

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