Budget Uncertainty and Faculty Contracts: A Dynamic Framework for Comparative Analysis
We 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.
|Date of creation:||Mar 2008|
|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
|Order Information:|| Email: |
References listed on IDEAS
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.:
- 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.
- Rey, Elena del & Romero, Laura, 2004. "Competition between public and private universities: quality, prices and exams," UC3M Working papers. Economics we046423, Universidad Carlos III de Madrid. Departamento de Economía.
- Garey Ramey & Joel Watson, 1997. "Contractual Fragility, Job Destruction, and Business Cycles," The Quarterly Journal of Economics, Oxford University Press, vol. 112(3), pages 873-911.
- 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.
- 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 275-293, July.
- Siow, Aloysius, 1998. "Tenure and Other Unusual Personnel Practices in Academia," Journal of Law, Economics and Organization, Oxford University Press, vol. 14(1), pages 152-173, April.
- Sergei Guriev & Dmitriy Kvasov, 2005.
"Contracting on Time,"
American Economic Review,
American Economic Association, vol. 95(5), pages 1369-1385, December.
- Sergei Guriev & Dmitriy Kvasov, 2005. "Contracting on Time," Working Papers w0059, Center for Economic and Financial Research (CEFIR).
- Sergei Guriev & Dmitriy Kvasov, 2005. "Contracting on Time," Sciences Po publications info:hdl:2441/4et5cqo2b89, Sciences Po.
- Carmichael, H Lorne, 1988. "Incentives in Academics: Why Is There Tenure?," Journal of Political Economy, University of Chicago Press, vol. 96(3), pages 453-472, June.
- 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-.
- Siow, Aloysius, 1984. "Occupational Choice under Uncertainty," Econometrica, Econometric Society, vol. 52(3), pages 631-645, May.
- 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.
- Waldman, Michael, 1990. "Up-or-Out Contracts: A Signaling Perspective," Journal of Labor Economics, University of Chicago Press, vol. 8(2), pages 230-250, April.
- Michael Waldman, 1989. "Up-or-Out Contracts: A Signaling Perspective," UCLA Economics Working Papers 556, UCLA Department of Economics.
- Maskin, Eric & Tirole, Jean, 2001. "Markov Perfect Equilibrium: I. Observable Actions," Journal of Economic Theory, Elsevier, vol. 100(2), pages 191-219, October.
- Eric Maskin & Jean Tirole, 1997. "Markov Perfect Equilibrium, I: Observable Actions," Harvard Institute of Economic Research Working Papers 1799, Harvard - Institute of Economic Research.
- VANHAECHT, Eve & PAUWELS, Wilfried, 2005. "University competition: Symmetric or asymmetric quality choices?," Working Papers 2005021, University of Antwerp, Faculty of Applied Economics.
- 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. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:6744. See general information about how to correct material in RePEc.
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.