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Academic Pay in the United Kingdom and the United States: The Differential Returns to Productivity and the Lifetime Earnings Gap

Author

Listed:
  • William J. Moore

    (Department of Economics, Louisiana State University)

  • Robert J. Newman

    () (Department of Economics, Louisiana State University)

  • Dek Terrell

    (Department of Economics, Louisiana State University)

Abstract

This paper estimates earnings functions for two samples of U.K. and U.S. academic economists. Despite significant differences in compensation schemes, a comparably specified human capital earnings model does a good job explaining earnings variations for academic economists in both countries. Our estimates suggest that rewards for research are more immediate and direct in the United States. Because of the national salary scale, the payoffs to experience and seniority are greater and the payoffs to research are lower in the United Kingdom than in the United States. After adjusting for productivity and demographic factors, we find that U.S. economists are paid approximately 40% more than otherwise equivalent economists in the United Kingdom. Simulating career age-earnings profiles for both markets, we find that the earnings gap widens with experience for relatively productive research economists and may even narrow with age for relatively less productive research economists. Nevertheless, the cumulative lifetime earnings foregone are substantial for research and nonresearch economists in the United Kingdom.

Suggested Citation

  • William J. Moore & Robert J. Newman & Dek Terrell, 2007. "Academic Pay in the United Kingdom and the United States: The Differential Returns to Productivity and the Lifetime Earnings Gap," Southern Economic Journal, Southern Economic Association, vol. 73(3), pages 717-732, January.
  • Handle: RePEc:sej:ancoec:v:73:3:y:2007:p:717-732
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    Citations

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    Cited by:

    1. Mariusz Kaszubowski & Joanna Wolszczak-Derlacz, 2014. "Salary and reservation wage gender gaps in Polish academia," GUT FME Working Paper Series A 19, Faculty of Management and Economics, Gdansk University of Technology.
    2. Damien Besancenot & João Ricardo Faria & Franklin G. Mixon, 2017. "Academic Research and the Strategic Interaction of Scholars and Editors: A Two-Stage Game," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 19(01), pages 1-16, March.
    3. Shingo Takahashi & Ana Maria Takahashi, 2009. "Gender Promotion Differences in Economics Departments in Japan: A Semi-parametric Duration Analysis," Working Papers EMS_2009_09, Research Institute, International University of Japan.
    4. David L. Anderson & John Tressler, 2011. "Ranking Economics Departments In Terms Of Residual Productivity: New Zealand Economics Departments, 2000–2006," Australian Economic Papers, Wiley Blackwell, vol. 50(4), pages 157-168, December.
    5. Bernt Bratsberg & James F. Ragan & John T. Warren, 2010. "Does Raiding Explain The Negative Returns To Faculty Seniority?," Economic Inquiry, Western Economic Association International, vol. 48(3), pages 704-721, July.
    6. Takahashi, Ana Maria & Takahashi, Shingo, 2015. "Gender promotion differences in economics departments in Japan: A duration analysis," Journal of Asian Economics, Elsevier, vol. 41(C), pages 1-19.
    7. Takahashi, Ana Maria & Takahashi, Shingo, 2011. "Gender salary differences in economics departments in Japan," Economics of Education Review, Elsevier, vol. 30(6), pages 1306-1319.

    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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