Student drop-out rates are higher in areas where teachers' unions predominate than in areas which are not unionized, according to a study by Caroline Hoxby of Harvard University. The study, entitled "How Teachers' Unions Affect Education Production," appeared in the August 1996 issue of the Quarterly Journal of Economics.

Starting with some background on the teachers' union movement:

• As teachers' unions have gained power over the past three decades, the proportion of students enrolled in unionized public school districts has grown from 1 percent in 1963 to 43 percent in 1992.

• In 1960, collective bargaining by teachers was illegal in many states.

• By 1970, 23 states had granted teachers the right to engage in some form of collective bargaining.

• Nine more states had done so by 1980 and an additional five by 1990.

Agency shops (in which unions collect dues from all teachers regardless of union membership) or union shops (where all teachers must join the union) were explicitly permitted in two states by 1970, 12 more by 1980 and another seven by 1990.

Now for the findings:

• Unionization is estimated to raise per pupil spending by about 12 percent -- three-quarters of which goes for higher teachers' salaries and lower student-teacher ratios.

• With unionization, salaries rise by about 5 percent.

• And student-teacher ratios fall by about two students per teacher.

• Using the student drop-out rate to measure school quality, Hoxby found that unionization raises the drop-out rate by about 2.3 percentage points.

In nonunionized schools, lower student-teacher ratios and higher teachers salaries lead to reduced drop-out rates. However, in unionized schools, neither student-teacher ratios nor teacher salaries have a detectable effect on drop-out rates.

Free market analysts contend unions divert extra school resources into the things they care about -- higher teacher pay and the reduced effort required to deal with fewer students -- rather than into better student performance.

Source: Robert J. Barro (Hoover Institution), "Teachers' Unions Don't Deliver Quality," Wall Street Journal, September 27, 1996.