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

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  • Ronald G. Ehrenberg
  • Paul J. Pieper
  • Rachel A. Willis

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. © 1998 by the President and Fellows of Harvard College and the Massachusetts Institute of Technolog

Suggested Citation

  • Ronald G. Ehrenberg & Paul J. Pieper & Rachel A. Willis, 1998. "Do Economics Departments With Lower Tenure Probabilities Pay Higher Faculty Salaries?," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 503-512, November.
  • Handle: RePEc:tpr:restat:v:80:y:1998:i:4:p:503-512
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    References listed on IDEAS

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    Cited by:

    1. Popp, Jennie S. Hughes & Abdula, Arby & Newton, Doris J. & Pittman, Dianne & Danforth, Diana M., 2009. "Factors Influencing Salaries of Agricultural Economics Professionals at Land Grant Institutions," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 46722, Southern Agricultural Economics Association.
    2. Ehrenberg, R.G.Ronald G., 2004. "Econometric studies of higher education," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 19-37.
    3. William J. Moore & Robert J. Newman & M. Dek Terrell, 2002. "Academic Economists' Pay and Productivity: A Tale of Two Countries," Departmental Working Papers 2002-16, Department of Economics, Louisiana State University.
    4. Michael Baker & Gary Solon, 2003. "Earnings Dynamics and Inequality among Canadian Men, 1976-1992: Evidence from Longitudinal Income Tax Records," Journal of Labor Economics, University of Chicago Press, vol. 21(2), pages 267-288, April.
    5. repec:eee:corfin:v:44:y:2017:i:c:p:487-505 is not listed on IDEAS
    6. Cruz-Castro, Laura & Sanz-Menéndez, Luis, 2010. "Mobility versus job stability: Assessing tenure and productivity outcomes," Research Policy, Elsevier, pages 27-38.
    7. Ian Ayres & Colin Rowat & Nasser Zakariya, 2004. "Optimal two stage committee voting rules," Game Theory and Information 0412006, EconWPA.
    8. Ronald G. Ehrenberg, 2002. "Studying Ourselves: The Academic Labor Market," NBER Working Papers 8965, National Bureau of Economic Research, Inc.
    9. 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.
    10. Heining, Jörg & Jerger, Jürgen & Lingens, Jörg, 2007. "Success in the Academic Labour Market for Economics - The German Experience," University of Regensburg Working Papers in Business, Economics and Management Information Systems 422, University of Regensburg, Department of Economics.
    11. Slade, Peter, 2013. "Gender and Academic Hiring: Evidence from a Two-Sided Matching Model," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150803, Agricultural and Applied Economics Association.
    12. Ding, David K. & Chen, Sheng-Syan, 2004. "The economy and demand for finance Ph.D.s: 1989-2001," Research in International Business and Finance, Elsevier, pages 253-290.
    13. 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.
    14. Ian Ayres & Colin Rowat & Nasser Zakariya, 2011. "Optimal voting rules for two-member tenure committees," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 36(2), pages 323-354, February.
    15. 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.

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