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Faculty Deployment in Research Universities

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  • Paul N. Courant
  • Sarah Turner

Abstract

Deploying faculty efficiently (or more efficiently) should surely part of any optimizing strategy on the part of a college or university. Basic microeconomics about the “theory of the firm” provide some insight as to how a university would achieve productive efficiency given differences in the price (salary rate) of faculty across disciplines and variation in compensation within departments. The prices of faculty activities demonstrate substantial variation across institutions, disciplines, within disciplines and over time. These observations about variation in input prices raise fundamental questions about whether and, if so, how differences in the cost of faculty affect resource allocation at research universities. We examine how teaching allocations and costs vary both between departments and within departments. This allocation is complicated because teaching and research are jointly produced by universities, while they are also substitutes at some margin in faculty time allocation. We examine the link between departmental compensation (payroll) and student course offerings at two major public research universities. Strikingly, we find that faculty compensation per student taught varies much less across departments than salary levels. In turn, changes over time in relative salaries by discipline are much larger than changes in faculty compensation per student as universities adjust to these cost pressures by increasing class size and increasing teaching inputs from other sources. We also find that within departments the highest-paid faculty teach fewer undergraduates and fewer undergraduate courses than their lower-paid colleagues. This finding confirms our hypothesis that salaries are determined principally by research output and associated reputation, and that universities respond rationally to relative prices in deploying faculty.

Suggested Citation

  • Paul N. Courant & Sarah Turner, 2017. "Faculty Deployment in Research Universities," NBER Working Papers 23025, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:23025
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    1. Ehrenberg, Ronald G. & McGraw, Marquise & Mrdjenovic, Jesenka, 2006. "Why do field differentials in average faculty salaries vary across universities?," Economics of Education Review, Elsevier, vol. 25(3), pages 241-248, June.
    2. John Bound & Michael F. Lovenheim & Sarah Turner, 2010. "Why Have College Completion Rates Declined? An Analysis of Changing Student Preparation and Collegiate Resources," American Economic Journal: Applied Economics, American Economic Association, vol. 2(3), pages 129-157, July.
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    Cited by:

    1. Dakota Murray & Clara Boothby & Huimeng Zhao & Vanessa Minik & Nicolas Bérubé & Vincent Larivière & Cassidy R Sugimoto, 2020. "Exploring the personal and professional factors associated with student evaluations of tenure-track faculty," PLOS ONE, Public Library of Science, vol. 15(6), pages 1-21, June.
    2. Steven W. Hemelt & Kevin M. Stange & Fernando Furquim & Andrew Simon & John E. Sawyer, 2021. "Why Is Math Cheaper than English? Understanding Cost Differences in Higher Education," Journal of Labor Economics, University of Chicago Press, vol. 39(2), pages 397-435.
    3. Sohvi Heaton & David Teece & Eugene Agronin, 2023. "Dynamic capabilities and governance: An empirical investigation of financial performance of the higher education sector," Strategic Management Journal, Wiley Blackwell, vol. 44(2), pages 520-548, February.

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    More about this item

    JEL classification:

    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions

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