We examine the labor supply decisions of substitute teachers – a large, on-demand market with broad shortages and inequitable supply. In 2018, Chicago Public Schools implemented a targeted bonus program designed to reduce unfilled teacher absences in largely segregated Black schools with historically low substitute coverage rates. Using a regression discontinuity design, we find that incentive pay substantially improved coverage equity and raised student achievement. Changes in labor supply were concentrated among Black and Hispanic substitutes from nearby neighborhoods with experience in incentive schools. Wage elasticity estimates suggest incentives would need to be 50% of daily wages to close fill-rate gaps.
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