FIGURE E-1 The supply of teachers: no licensing test.

NOTES:

T₀=number of individuals who would choose the teaching occupation at wage W₀;

E₀=number of individuals in group C who would choose the teaching occupation at wage W₀.

may do with varying success. To capture the imperfect nature of tests, let m_I and m_C be the proportions of incompetent and competent individuals, respectively, who are classified as incompetent.³ Thus, if the test could discriminate perfectly, m_I would be one (all those from group I would be determined to be incompetent) and m_C would be zero (none of those from group C would be determined to be incompetent). It is reasonable to assume that m_I exceeds m_C for current licensing tests, although the extent to which this is true is unknown and may differ among both the type of skills that are tested (basic skills, subject matter knowledge, pedagogical content knowledge) and among different tests of the same skills.

Further, assume that a cost must be incurred to take the test, including both a monetary cost, which is the same for both groups, and a cost in terms of the effort involved in preparing for the test, which may differ between the two groups.⁴ These costs are denoted by t_I and t_C. Although stronger than necessary,