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Do Economics Departments With Lower Tenure Probabilities Pay Higher Faculty Salaries?

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  • Ronald G. Ehrenberg
  • Paul J. Pieper
  • Rachel A. Willis

Abstract

The simplest competitive labor market model asserts that if tenure is a desirable job characteristic for professors, they should be willing to pay for it by accepting lower salaries. Conversely, if an institution unilaterally reduces the probability that its assistant professors receive tenure, it will have to pay higher salaries to attract new faculty. Our paper tests this theory using data on salary offers accepted by new assistant professors at economics departments in the United States during the 1974-75 to 1980-81 period, along with data on the proportion of new Ph.D.s hired by each department between 1970 and 1980 that received tenure in the department or at a comparable or higher quality department within the first eight years of receipt of their Ph.D.s. We find evidence that supports the hypothesis that a tradeoff existed. Equally importantly, departments that offered low tenure probabilities to assistant professors also paid higher salaries to their tenured faculty. We attribute this to low tenure probabilities inducing higher effort from assistant professors and thus leading to higher productivity of faculty ultimately promoted to tenure. © 1998 by the President and Fellows of Harvard College and the Massachusetts Institute of Technolog

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Bibliographic Info

Article provided by MIT Press in its journal The Review of Economics and Statistics.

Volume (Year): 80 (1998)
Issue (Month): 4 (November)
Pages: 503-512

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Handle: RePEc:tpr:restat:v:80:y:1998:i:4:p:503-512

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Cited by:
  1. Slade, Peter, 2013. "Gender and Academic Hiring: Evidence from a Two-Sided Matching Model," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C., Agricultural and Applied Economics Association 150803, Agricultural and Applied Economics Association.
  2. John P. Formby & Gary Hoover, 2002. "Salary Determinants of Entry-Level Academic Economists and the Characteristics of Those Hired on the Tenure Track," Eastern Economic Journal, Eastern Economic Association, Eastern Economic Association, vol. 28(4), pages 509-522, Fall.
  3. Ding, David K. & Chen, Sheng-Syan, 2004. "The economy and demand for finance Ph.D.s: 1989-2001," Research in International Business and Finance, Elsevier, Elsevier, vol. 18(3), pages 253-290, September.
  4. Ronald G. Ehrenberg, 2002. "Studying Ourselves: The Academic Labor Market," NBER Working Papers 8965, National Bureau of Economic Research, Inc.
  5. Heining, Jörg & Jerger, Jürgen & Lingens, Jörg, 2007. "Success in the Academic Labour Market for Economics - The German Experience," University of Regensburg Working Papers in Business, Economics and Management Information Systems, University of Regensburg, Department of Economics 422, University of Regensburg, Department of Economics.
  6. Popp, Jennie S. Hughes & Abdula, Arby & Newton, Doris J. & Pittman, Dianne & Danforth, Diana M., 2009. "Factors Influencing Salaries of Agricultural Economics Professionals at Land Grant Institutions," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia, Southern Agricultural Economics Association 46722, Southern Agricultural Economics Association.
  7. Ian Ayres & Colin Rowat & Nasser Zakariya, 2006. "Optimal two stage committee voting rules," Discussion Papers, Department of Economics, University of Birmingham 04-23r, Department of Economics, University of Birmingham.
  8. Ian Ayres & Colin Rowat & Nasser Zakariya, 2011. "Optimal voting rules for two-member tenure committees," Social Choice and Welfare, Springer, Springer, vol. 36(2), pages 323-354, February.
  9. Ehrenberg, Ronald G. & McGraw, Marquise & Mrdjenovic, Jesenka, 2006. "Why do field differentials in average faculty salaries vary across universities?," Economics of Education Review, Elsevier, Elsevier, vol. 25(3), pages 241-248, June.
  10. Debra Comer & Susan Stites-Doe, 2006. "Antecedents and Consequences of Faculty Women’s Academic–Parental Role Balancing," Journal of Family and Economic Issues, Springer, Springer, vol. 27(3), pages 495-512, September.
  11. William J. Moore & Robert J. Newman & M. Dek Terrell, . "Academic Economists' Pay and Productivity: A Tale of Two Countries," Departmental Working Papers, Department of Economics, Louisiana State University 2002-16, Department of Economics, Louisiana State University.
  12. Cruz-Castro, Laura & Sanz-Menéndez, Luis, 2010. "Mobility versus job stability: Assessing tenure and productivity outcomes," Research Policy, Elsevier, Elsevier, vol. 39(1), pages 27-38, February.
  13. Ehrenberg, R.G.Ronald G., 2004. "Econometric studies of higher education," Journal of Econometrics, Elsevier, Elsevier, vol. 121(1-2), pages 19-37.
  14. Ronald G. Ehrenberg, 2012. "American Higher Education in Transition," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 26(1), pages 193-216, Winter.

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