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This article examines how the entry of private independent high schools in Sweden affects the mobility and wages of teachers in a market with individual wage bargaining. Using matched employer–employee panel data covering all high school teachers over 16 years, I show that the entry of private schools is associated with higher teacher salaries, also for teachers in public schools. The wage returns from competition are highest for teachers entering the profession and for teachers in maths and science. Private school entry also seems to have increased wage dispersion between high- and low-skilled teachers within the same field.