This working paper examines the growing trend towards the use of contract teachers in developing countries as a response to acute teacher shortages and perceived financial constraints, and their impact on the quality of education, the status of teachers and the financial efficiency in the education system. Many different types of teachers fall under the label of “contract teachers”, including volunteers, community teachers and para-teachers, but in most cases the salaries and conditions of these teachers are far inferior to those of regular civil service teachers. Contract teachers have been used to meet a range of objectives from increasing access to education, particularly in remote and unattractive areas serving minority populations, to providing a source of youth employment.