An unequal distribution of teacher quality is a problem underlying the unequal distribution of educational outcomes in developing countries. However, we know little about how the labor market produces such a distribution. Using data from two regions in Peru, we investigate whether there is a national teacher market or smaller regional markets. We estimate discrete-choice multinomial models to identify variables (including teacher characteristics, institutional features and geographical factors) associated with the location of teachers in the first jobs of their careers. Results indicate that teacher markets are regional in scope. Being born in a certain province (sub-area of a region) substantially increases the probability of having a first teaching position in that same province. We also find evidence that the geographic mobility of teachers is quite limited. Results suggest that policies to strengthen teacher educational systems and reduce inequities should focus on the regional level. © 2012 Elsevier Ltd.