Budget Uncertainty and Faculty Contracts: A Dynamic Framework for Comparative Analysis
AbstractWe study hiring decisions made by competing universities in a dynamic framework, focusing on the structure of university finance. Universities with annual state-approved financing underinvest in high-quality faculty, while universities that receive a significant part of their annual income from returns on endowments hire fewer but better faculty and provide long-term contracts. If university financing is linked to the number of students, there is additional pressure to hire low-quality short-term staff. An increase in the university's budget might force the university to switch its priorities from `research' to `teaching' in equilibrium. We employ our model to discuss the necessity for state-financed endowments, and investigate the political economics of competition between universities, path-dependence in the development of the university system, and higher-education reform in emerging market economies.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6744.
Date of creation: Mar 2008
Date of revision:
Contact details of provider:
Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
Other versions of this item:
- K. Sonin & I. Khovanskaya & M. Yudkevich., 2008. "Budget Uncertainty and Faculty Contracts: A Dynamic Framework for Comparative Analysis," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 12.
- Irina Khovanskaya & Konstantin Sonin & Maria Yudkevich, 2007. "Budget Uncertainty and Faculty Contracts: A Dynamic Framework for Comparative Analysis," Working Papers w0112, Center for Economic and Financial Research (CEFIR).
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
- I20 - Health, Education, and Welfare - - Education - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-04-12 (All new papers)
- NEP-EDU-2008-04-12 (Education)
- NEP-GTH-2008-04-12 (Game Theory)
- NEP-SOG-2008-04-12 (Sociology of Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Scott E. Masten, 2006. "Authority and Commitment: Why Universities, Like Legislatures, Are Not Organized as Firms," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 15(3), pages 649-684, 09.
- De Fraja, Gianni & Iossa, Elisabetta, 2002. "Competition among Universities and the Emergence of the Elite Institution," Bulletin of Economic Research, Wiley Blackwell, vol. 54(3), pages 275-93, July.
- Eric Maskin & Jean Tirole, 1997.
"Markov Perfect Equilibrium, I: Observable Actions,"
Harvard Institute of Economic Research Working Papers
1799, Harvard - Institute of Economic Research.
- Siow, Aloysius, 1998. "Tenure and Other Unusual Personnel Practices in Academia," Journal of Law, Economics and Organization, Oxford University Press, vol. 14(1), pages 152-73, April.
- Sergei Guriev & Dmitriy Kvasov, 2005.
"Contracting on Time,"
w0059, Center for Economic and Financial Research (CEFIR).
- Laura Romero & Elena del Rey, 2004. "Competition Between Public And Private Universities: Quality, Prices And Exams," Economics Working Papers we046423, Universidad Carlos III, Departamento de Economía.
- Carmichael, H Lorne, 1988. "Incentives in Academics: Why Is There Tenure?," Journal of Political Economy, University of Chicago Press, vol. 96(3), pages 453-72, June.
- Ramey, Garey & Watson, Joel, 1997. "Contractual Fragility, Job Destruction, and Business Cycles," The Quarterly Journal of Economics, MIT Press, vol. 112(3), pages 873-911, August.
- Michael S. McPherson & Morton Owen Schapiro, 1999. "Tenure Issues in Higher Education," Journal of Economic Perspectives, American Economic Association, vol. 13(1), pages 85-98, Winter.
- Siow, Aloysius, 1984. "Occupational Choice under Uncertainty," Econometrica, Econometric Society, vol. 52(3), pages 631-45, May.
- Michael Waldman, 1989.
"Up-or-Out Contracts: A Signaling Perspective,"
UCLA Economics Working Papers
556, UCLA Department of Economics.
- Michael Alexeev & Clifford Gaddy & Jim Leitzel, 1992. "Economics in the Former Soviet Union," Journal of Economic Perspectives, American Economic Association, vol. 6(2), pages 137-148, Spring.
- Philip G. Altbach, 2007. "Peripheries and Centres: Research Universities in Developing Countries," Higher Education Management and Policy, OECD Publishing, vol. 19(2), pages 1-24.
- John Pencavel, 2001.
"The Response of Employees to Severance Incentives: The University of California's Faculty, 1991-94,"
Journal of Human Resources,
University of Wisconsin Press, vol. 36(1), pages 58-84.
- Pencavel, J., 2000. "The Response of Employees to Severance Incentives: The University of California's Faculty, 1991-94," Papers 99-019, United Nations World Employment Programme-.
- Vanhaecht E. & Pauwels W., 2005. "University competition: Symmetric or asymmetric quality choices?," Working Papers 2005021, University of Antwerp, Faculty of Applied Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.