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AbstractWe examine the dynamic nature of teacher skill development using panel data on principals' subjective performance ratings of teachers. Past research on teacher productivity improvement has focused primarily on one important but narrow measure of performance: teachers' value‐added to student achievement on standardized tests. Unlike value‐added, subjective performance ratings provide detailed information about specific skill dimensions and are available for teachers in non‐tested grades and subjects. Using a within‐teacher returns‐to‐experience framework, we find, on average, large and rapid improvements in teachers' instructional practices throughout their first 10 years on the job as well as substantial differences in improvement rates across individual teachers. We also document that subjective performance ratings contain important information about teacher effectiveness. In the district we study, principals appear to differentiate teacher performance throughout the full distribution instead of just in the tails. Furthermore, prior performance ratings and gains in these ratings provide additional information about teachers' ability to improve test scores that is not captured by prior value‐added scores. Taken together, our study provides new insights on teacher performance improvement and variation in teacher development across instructional skills and individual teachers.