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I am looking for a Precedent of a country that would have done a teaching reform: From many tutors with minimal (or low) salaries to a fewer teachers with bigger salaries and how did it work out...

I was a bit reluctant inquiring here, so have asked this on meta and it seems this question does not break any rules as long as we are talking about universities.

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    This has been tested at the level of individual schools. I do not know about entire countries. It is a big difference because if you change one school, you can use higher salaries to get new teachers from other schools. If you change a whole country, it is not trivial to get new teachers from another country. – Anonymous Physicist Oct 17 '16 at 8:23
  • @AnonymousPhysicist this would be just fine, as underlying economic forces should work same way at a country or single large enough institution level. – Matas Vaitkevicius Oct 17 '16 at 8:26
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    For large or isolated countries, I disagree. – Anonymous Physicist Oct 17 '16 at 8:27
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    If Monaco wanted to replace all its teachers with better ones, they could do it. If the USA wanted to replace all its teachers with better ones, they could not find 1.5 million experts who were willing to move, no matter how much money they offered. – Anonymous Physicist Oct 17 '16 at 8:33
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    The question didn't say anything about replacing them with better teachers, just increasing salaries. Taken literally, one could achieve this by firing half the faculty at random and doubling salaries for those who were left. No immigration required. – Nate Eldredge Oct 17 '16 at 13:50
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Your scenario is to a large extent ongoing in Russia now. In May 2012 "newly re-elected" president Putin signed a number of bills for the Government to implement in 2012-2021. In particular, Bill 597 says that ...

by 2012 average salaries of teachers should reach the average level in corresponding regions

by 2018 average salaries of teachers should reach 200% of the average level in corresponding regions

The implementation and the effect of this bill is rather controvertial. It seems that the required government funding for the educational sector was not increased appropriately. To comply with the request, many schools and HE institutions had to reduce the number of posts significantly to report the required increase in average salaries. In practice, many tutors were pushed on 0.5FTE contracts (or less) with increased FTE salary levels, ending up with the same take-home salaries and sometimes higher teaching load. The overall effect on the sector is hard to see at the moment, since it is obscured by other ongoing reforms and political changes.

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In order to reduce the number of teachers, while still teaching the same number of students, means either increasing the "teaching load" or the efficiency of the teaching needs to be increase.

Increases in teaching load require decreases in other job responsibilities. This is essentially the difference between teaching only colleges and research universities in the US and new and old universities in the UK. While teaching only colleges do not generally pay their faculty more, there is evidence/claims that having professors with active research benefits students.

One way to increase teaching efficiency is with larger classes. From my understanding moving from small seminars (10 students) to large seminars (40 students) is bad for student outcomes (again no change in how much faculty get paid). I am not sure if going from a 200 person lecture to a 400 person lecture has the same hit in learning outcomes, but logistically, most universities are lacking large (400+) lecture halls. Additionally, logistically, large classes often means less variety to students.

Another way to increase efficiency is for less contact hours (and to an extent less assignments requiring grading). The US and UK teaching models basically hit the extremes in terms of contact hours and grading. The US has lots of student contact and lots of small assessments compared to the UK. I do not know if there is any evidence that one system is better than another, but having US students switch at the university level would be difficult.

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