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Seniority, External Labor Markets, and Faculty Pay

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  • Byron W. Brown

    (Michigan State University)

  • Stephen A. Woodbury

    ()
    (W.E. Upjohn Institute for Employment Research)

Abstract

We estimate the returns to seniority (the wage-tenure profile) for university faculty, and the degree to which these returns respond to entry-level salaries (or opportunity wages) a relationship unexplored in work to date. Using data on faculty at a Big Ten university (ours), we estimate elasticities of senior-faculty salaries with respect to entry-level salaries, and find that these elasticities decline with seniority. The evidence both provides an explanation of faculty salary compression and suggests the importance of controlling for entry-level salaries in obtaining estimates of the returns to seniority.

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Bibliographic Info

Paper provided by W.E. Upjohn Institute for Employment Research in its series Upjohn Working Papers and Journal Articles with number 95-37.

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Date of creation: May 1995
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Handle: RePEc:upj:weupjo:95-37

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Keywords: faculty; wages; college; labor; markets; Brown; Woodbury;

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References

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  1. Louis S. Jacobson & Robert J. LaLonde & Daniel G. Sullivan, 1993. "Long-term earnings losses of high-seniority displaced workers," Economic Perspectives, Federal Reserve Bank of Chicago, issue Nov, pages 2-20.
  2. Katharine G. Abraham & Henry S. Farber, 1988. "Returns to seniority in union and nonunion jobs: A new look at the evidence," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 42(1), pages 3-19, October.
  3. Katharine G. Abraham & Henry S. Farber, 1986. "Job Duration, Seniority and Earnings," Working papers 407, Massachusetts Institute of Technology (MIT), Department of Economics.
  4. Robert H. Topel, 1990. "Specific Capital, Mobility, and Wages: Wages Rise with Job Seniority," NBER Working Papers 3294, National Bureau of Economic Research, Inc.
  5. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, octubre-d.
  6. Louis S. Jacobson & Robert J. LaLonde & Daniel Sullivan, 1992. "Earnings Losses of Displaced Workers," Upjohn Working Papers and Journal Articles 92-11, W.E. Upjohn Institute for Employment Research.
  7. Daniel S. Hamermesh, 1987. "Why Do Fixed-Effects Models Perform So Poorly? The Case of Academic Salaries," NBER Working Papers 2135, National Bureau of Economic Research, Inc.
  8. Hashimoto, Masanori, 1981. "Firm-Specific Human Capital as a Shared Investment," American Economic Review, American Economic Association, vol. 71(3), pages 475-82, June.
  9. Brown, James N, 1989. "Why Do Wages Increase with Tenure? On-the-Job Training and Life-Cycle Wage Growth Observed within Firms," American Economic Review, American Economic Association, vol. 79(5), pages 971-91, December.
  10. Joseph G. Altonji & Robert A. Shakotko, 1985. "Do Wages Rise With Job Seniority?," NBER Working Papers 1616, National Bureau of Economic Research, Inc.
  11. Kevin Hallock, 1994. "Seniority and Monopsony in the Academic Labor Market: Comment," Working Papers 715, Princeton University, Department of Economics, Industrial Relations Section..
  12. Hutchens, Robert M, 1989. "Seniority, Wages and Productivity: A Turbulent Decade," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 49-64, Fall.
  13. Walter Y. Oi, 1962. "Labor as a Quasi-Fixed Factor," Journal of Political Economy, University of Chicago Press, vol. 70, pages 538.
  14. Lazear, Edward P, 1981. "Agency, Earnings Profiles, Productivity, and Hours Restrictions," American Economic Review, American Economic Association, vol. 71(4), pages 606-20, September.
  15. Jovanovic, Boyan, 1979. "Job Matching and the Theory of Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 972-90, October.
  16. Debra A. Barbezat, 1989. "The effect of collective bargaining on salaries in higher education," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 42(3), pages 443-455, April.
  17. Ransom, Michael R, 1993. "Seniority and Monopsony in the Academic Labor Market," American Economic Review, American Economic Association, vol. 83(1), pages 221-33, March.
  18. Johnson, George E & Stafford, Frank P, 1974. "Lifetime Earnings in a Professional Labor Market: Academic Economists," Journal of Political Economy, University of Chicago Press, vol. 82(3), pages 549-69, May/June.
  19. Hutchens, Robert M, 1987. "A Test of Lazear's Theory of Delayed Payment Contracts," Journal of Labor Economics, University of Chicago Press, vol. 5(4), pages S153-70, October.
  20. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4 National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Euwals, Rob & Ward-Warmedinger, Melanie, 2000. "What Matters Most: Teaching or Research? Empirical Evidence on the Remuneration of British Academics," CEPR Discussion Papers 2628, C.E.P.R. Discussion Papers.
  2. Ward-Warmedinger, Melanie E., 1999. "Salary and the Gender Salary Gap in the Academic Profession," IZA Discussion Papers 64, Institute for the Study of Labor (IZA).
  3. Rob Euwals & Melanie Ward, . "The Remuneration of British Academics," Discussion Papers in Public Sector Economics 00/7, Department of Economics, University of Leicester.
  4. Sun, Minghe, 2002. "A multiple objective programming approach for determining faculty salary equity adjustments," European Journal of Operational Research, Elsevier, vol. 138(2), pages 302-319, April.
  5. Wendy A. Stock & John J. Siegfried, 2006. "Where are they Now? Tracking the Ph.D. Class of 1997," Vanderbilt University Department of Economics Working Papers 0605, Vanderbilt University Department of Economics.
  6. Rob Euwals & Melanie Ward, 2005. "What matters most: teaching or research? Empirical evidence on the remuneration of British academics," Applied Economics, Taylor & Francis Journals, vol. 37(14), pages 1655-1672.
  7. Toumanoff, Peter, 2005. "The effects of gender on salary-at-hire in the academic labor market," Economics of Education Review, Elsevier, vol. 24(2), pages 179-188, April.
  8. Euwals, Rob & Ward-Warmedinger, Melanie E., 2000. "The Remuneration of British Academics," IZA Discussion Papers 178, Institute for the Study of Labor (IZA).
  9. Nelson, Paul A. & Monson, Terry, 2006. "Research Funding, Experience, and Seniority in Academia," Review of Applied Economics, Review of Applied Economics, vol. 2(1).
  10. Felice Martinello, 2009. "Faculty Salaries in Ontario: Compression, Inversion, and the Effects of Alternative Forms of Representation," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 63(1), pages 128, October.

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