Peter Dolton and Oscar Marcenaro-Gutierrez summarize their research on the topic:
[I]mproving teachers’ pay improves their standing in a country’s income distribution and hence the national status of teaching as a profession. As a result of this higher status, more young people will want to become teachers. This in turn makes teaching a more selective profession and hence facilitates the recruitment of more able individuals. Higher status and higher pay are invariably linked but the two can provide separate driving forces to engineer better recruits to the profession. The key hypothesis is that better pay for teachers will attract higher quality graduates into the profession and that this will improve pupil performance.