This article reviews the contributions and limitations of economic analyses of resource allocation policies aimed at improving teacher quality. Two analytic frameworks taken from the study of the economics of education are employed: productivity theory and human capital theory. The article first summarizes results of various economic analyses of the productivity of resources and discusses the strengths and limitations of this approach for informing questions about investments in teacher quality. Next, the aspects of human capital theory, which are relevant to the issue of resource allocation for the development of teachers' capabilities and careers, are presented. These aspects are considered in addressing two teacher policy arenas in which resource allocation is a critical feature: teacher compensation and professional development. The paper concludes that this review of economic perspectives from human capital and productivity theories has implications for the design and implementation of investment policies targeted at improving teacher quality. It explores some of the possible implications for policymakers when faced with resource allocation decisions regarding policies aimed at improving teacher quality. (Contains 70 references.) (SM)