teachers did not expect to be regularized in the future. This sets a time-frame for the wage savings from temporary contracts if all temporary contracts were to be converted to permanent in 4 to 7 years, the latter for those hired in 2002. In reality, it wasn’t until 2012 that continued agitation by existing contract teachers led many to be converted to permanent status, receiving concomitantly higher wages thereafter.

Our natural experiment allows us to conduct a simple but important exercise to understand the effects of changes to teacher hiring policies. By examining what happens to teacher quality when the government decreases salaries by more than one-third for _all_ incoming teachers, we can directly assess how large-scale contract teacher policies affect the quality of new entrants, as measured by their effect on student outcomes, with the caveat that the reform jointly affected incentives and remuneration, rather than remuneration alone.

# **3 Data**

We use data collected across four rounds (2003 to 2007) of the Learning and Educational Achievement in Punjab Schools Survey (LEAPS). The original sample includes 823 schools (496 public) in 112 villages of 3 districts in the province of Punjab, with an additional 335 (111 public) schools entering the sample over the next four years.<sup>17</sup> The project was designed as part of a study of the rise of private schooling and, as a result, all the villages included in the study were randomly selected from a list frame of villages with at least one private school when the study began in 2003. As these villages tend to be larger and wealthier, the sample is representative of 60% of the rural population in the province of Punjab.

For our purposes, two parts of the data collection are key. First, a teacher roster was completed for all teachers within the school in each year of the survey. This roster included sociodemographic data on teachers (gender, age, educational attainment) and in the fourth round, monthlevel data on when the teacher began teaching. We use variables from the teacher roster to look at the differences between contract and permanent teachers in demographic characteristics, salaries, and subject knowledge. Appendix Table A1 provides summary statistics for these characteristics for both public and private school teachers across the four rounds of the survey.<sup>18</sup> Our data collection reveals that most schools in our sample have 1 or fewer teachers per grade; we only observe multiple teachers teaching in a grade in 26% of public schools and 29% of private

> 17The three districts were chosen on the basis of an accepted stratification of the province into the better performing north and central regions and the poorly performing south.

> 18At times, we wish to compare teachers in terms of measures that were collected over multiple survey rounds, such as school facilities or teacher absences. To normalize these measures, we regress them on year fixed effects and teacher or school fixed effects, depending on the level at which the characteristic is observed. We then use the teacher or school fixed effect as the teacher-level measure. This process is analogous to how we combine test score data from multiple years to calculate teacher value-added measures.

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