Economics @ ITT

States hire foreign teachers to ease shortages

Posted in microeconomics by ittecon on September 15, 2008

I saw this article the other day on MSNBC about a shortage of teacher in the US. In a free market, a shortage cannot exist except in the short term.  When the corporate media uses the term shortage, it is usually coded-speak for firms don’t want to pay more money to bring the supply into equilibrium. The demand for teachers is higher than the supply of nurses.  What this means, hypothetically,  is that the market is offering $40,000 a year for teachers in an environment that teachers may be willing to work for $50,000, and there is a disconnect.  The solution is not to import teachers—although it is one solution. The solution is to pay them more. This would be an incentive to teachers to enter the profession.

This can be demonstrated by the classic graph of supply-demand:



Schools are offering a wage of P3. At P3, they are expecting Q3 teachers; however, at this wage (price) point, teachers are only willing to supply Q1. No surprises here. If schools really need Q3 teachers, they would have to pay wages of P1.   In any case, a market clearing equilibrium can be gained by paying P2.

Here are some other articles on the matter of shortages:


3 Responses

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  1. judith mata said, on October 3, 2008 at 12:12 am

    If schools truly want more teachers and for them to perform more tasks then, of course, there needs to be a raise in salary. Even if they are willing to bring teachers from other countries, eventually they are going to realize that they can be getting paid more. If schools want more quantity than they need to offer a higher price because no one is going to want to work for Q1 and Q3 makes no sense.

  2. […] no nursing shortage, teacher shortage, engineer shortage… I posted this about the so-called nursing shortage in […]

  3. ittecon said, on November 27, 2012 at 8:25 am

    See my post about what Paul Krugman said about this recently:

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