TEACHER SHORTAGES AND THE
BUSINESS CYCLE Torberg Falch
, Kåre Johansen and Bjarne Strøm*)
The ability of the public sector to recruit
skilled workers is important for the quality of public sector services.
Centralized and rigid pay systems in the public sector might give
limited labor supply and shortages of qualified personnel in areas and
periods with strong outside labor markets. This paper shows that teacher
shortages measured by the share of teachers without approved education
are strongly procyclical in Norway. Using a large panel of Norwegian
local governments for 1981-2002 and exploiting the rigid wage system, we
find a sizeable negative relationship between teacher shortages and the
regional unemployment rate.