Using a gain model with three different levels of fixed effects, this paper empirically esti-mates the impacts of teachers on students' achievement in three districts in the rural province ofPunjab in Pakistan. The model-based results suggest that teachers' factors do explain students'achievement. Increasing teachers' wages could improve schooling quality along with recruitinglocal teachers with non-permanent contracts. Recruiting local teachers has an important posi-tive impact on students' achievement especially for girls. It could therefore reduce gender basedinequalities of academic achievement. Furthermore, our analysis suggests that policy reforms con-cerning training programs and re-thinking wage policies should be on the agenda of future research.