INCREASING teachers' pay can boost pupil performance, a review of international research has found.
Researchers also found that raising total spending per pupil improves achievement.
The authors of the report - for the Department for Education and Employment's new Value for Money Unit - said that their findings contradicted the "widely held" view that pupil performance does not depend on spending or teacher characteristics.
Research from other countries, mainly the United States, had "generally" established a link between certain education "inputs" - such as teachers' pay and total spending - and "enhanced student outcomes", they said.
However, the issue was far from settled with academics reaching conflicting conclusions, the report added.
The unit's first report found that the link between pay and pupil results was stronest for experienced teachers: well-paid veteran teachers outperformed their poorly rewarded peers.
However, author Ros Levacic was careful to emphasise that the research was conducted in American schools, which can set pay rates to attract the best teachers.
Teaching experience does have a positive effect on pupils, but only a small one, the review by academics from the London School of Economics' centre for the economics of education found.
Reducing class size does appear to boost achievement - but the effects are small.
The report criticised the lack of reliable data to enable similar studies to be conducted in English schools.
The Relationship Between Resource Allocation and Pupil Attainment: A Review is available from DFEE publications price pound;4.95 on 0845 602 2260 or a summary is at www.dfee.gov.ukresearch