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

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Author Info
Ronald G. Ehrenberg
Paul J. Pieper
Rachel A. Willis

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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. © 2000 by the President and Fellows of Harvard College and the Massachusetts Institute of Technolog

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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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  1. Heining, Jörg & Jerger, Jürgen & Lingens, Jörg, 2007. "Success in the academic labour market for economists - the German experience," Regensburger Diskussionsbeiträge zur Wirtschaftswissenschaft 422, University of Regensburg, Department of Economics. [Downloadable!]
  2. Ian Ayres & Colin Rowat & Nasser Zakariya, 2007. "Optimal Two Stage Committee Voting Rules," Discussion Papers 04-23RR, Department of Economics, University of Birmingham. [Downloadable!]
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  3. Debra Comer & Susan Stites-Doe, 2006. "Antecedents and Consequences of Faculty Women’s Academic–Parental Role Balancing," Journal of Family and Economic Issues, Springer, vol. 27(3), pages 495-512, September. [Downloadable!] (restricted)
  4. William J. Moore & Robert J. Newman & M. Dek Terrell, . "Academic Economists' Pay and Productivity: A Tale of Two Countries," Departmental Working Papers 2002-16, Department of Economics, Louisiana State University. [Downloadable!]
  5. 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, vol. 28(4), pages 509-522, Fall. [Downloadable!]
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