My answer is
(E). It took me 22 seconds.
(A) SVA error. "teachers" should be paired with are.
(B) "would improve" would be correct if the sentence started with "if teachers were paid higher wages".
(C) Does not make sense. Future perfect tense should have a date in the future, to say the least.
(D) A bit tricky. I eliminated (D) mainly because (E) matches a pattern in which "When the verb in the main clause is in the future tense, Use present tenses in the subordinate clauses to refer to the future."
(E) matches the pattern abovementioned.
Some say that "can" implies uncertainty or mere possibility while "will" implies a stronger and more definite connection between higher wages and improvement in education standards. That might make some sense, but maybe the author is indeed not so sure about his prediction. So, ultimately, I choose (E) over (D) mainly because it is the most conventional way to use verb tense: When the verb in the main clause is in the future tense, Use present tenses in the subordinate clauses to refer to the future.