Prior research has found that economic downturns have positive effects on new teacher quality, but has not been able to determine the extent to which this relationship arises from a supply response (increased quantity or positive selection of teaching candidates) vs. a demand response (selection in hiring enabled by falling demand). In this paper, I use longitudinal data on students and teachers in Massachusetts to describe the effects of higher unemployment rates on both supply and demand for teachers. I show that students who graduate from college when unemployment rates are higher are more likely to take a teacher certification test, and that this effect is stronger among students who were higher achieving while in high school. On the demand side of the market, higher unemployment reduces new teacher hiring and the overall number of teachers employed, but I find no evidence that schools differentially employ higher achieving teaching candidates during economic downturns. While I cannot definitively rule out changes in demand-side selection, I show that much of the positive relationship between unemployment rates and teacher quality can be explained by positively selected supply. My results suggest that economic incentives impact both the quantity and the quality of new teaching candidates, with implications for attracting and retaining high-quality teachers outside of economic downturns.
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