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Why tenure?

Author

Listed:
  • Cater, Bruce
  • Lew, Byron
  • Pivato, Marcus

Abstract

Academic research is a public good whose production is supported by the tuition-paying students that a faculty's research accomplishments attract. A professor's spot contribution to the university's revenues thus depends not on her spot research production, but rather on her cumulative research record. We show that a profit-maximizing university will apply a `high' minimum retention standard to the production of a junior professor who has no record of past research, but a `zero' retention standard to the spot production of a more senior professor whose background includes accomplishments sufficient to have cleared the `high' probationary hurdle.

Suggested Citation

  • Cater, Bruce & Lew, Byron & Pivato, Marcus, 2009. "Why tenure?," MPRA Paper 14823, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:14823
    as

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    File URL: https://mpra.ub.uni-muenchen.de/14823/1/MPRA_paper_14823.pdf
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    References listed on IDEAS

    as
    1. 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.
    2. Levin, Sharon G & Stephan, Paula E, 1991. "Research Productivity over the Life Cycle: Evidence for Academic Scientists," American Economic Review, American Economic Association, vol. 81(1), pages 114-132, March.
    3. Smith Freeman, 1977. "Wage Trends as Performance Displays Productive Potential: A Model and Application to Academic Early Retirement," Bell Journal of Economics, The RAND Corporation, vol. 8(2), pages 419-443, Autumn.
    4. Rothschild, Michael & White, Lawrence J, 1995. "The Analytics of the Pricing of Higher Education and Other Services in Which the Customers Are Inputs," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 573-586, June.
    5. Bernhardt, Dan & Scoones, David, 1993. "Promotion, Turnover, and Preemptive Wage Offers," American Economic Review, American Economic Association, vol. 83(4), pages 771-791, September.
    6. 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.
    7. MacLeod, W Bentley & Malcomson, James M, 1989. "Implicit Contracts, Incentive Compatibility, and Involuntary Unemployment," Econometrica, Econometric Society, vol. 57(2), pages 447-480, March.
    8. 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.
    9. Holmstrom, Bengt & Milgrom, Paul, 1987. "Aggregation and Linearity in the Provision of Intertemporal Incentives," Econometrica, Econometric Society, vol. 55(2), pages 303-328, March.
    10. Siow, Aloysius, 1997. "Some evidence on the signalling role of research in academia," Economics Letters, Elsevier, vol. 54(3), pages 271-276, July.
    11. Pearce, David G. & Stacchetti, Ennio, 1998. "The Interaction of Implicit and Explicit Contracts in Repeated Agency," Games and Economic Behavior, Elsevier, vol. 23(1), pages 75-96, April.
    12. Kahn, Charles & Huberman, Gur, 1988. "Two-sided Uncertainty and "Up-or-Out" Contracts," Journal of Labor Economics, University of Chicago Press, vol. 6(4), pages 423-444, October.
    13. 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.
    14. Bruce Cater & Byron Lew & Barry Smith, 2008. "A theory of tenure-track contracts," Education Economics, Taylor & Francis Journals, vol. 16(2), pages 203-218.
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    More about this item

    Keywords

    academic tenure; labour contract; up-or-out;

    JEL classification:

    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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