Academia or the Private Sector? Sorting of Agents into Institutions and an Outside Sector
This paper develops an equilibrium sorting model with utility maximizing agents (researchers) on one side of the market, and on the other side institutions (universities) and an outside sector. Researchers are assumed to care about peer effects, their relative status within universities, and salary compensation. They differ in their concern for salary compensation as well as in their ability. We derive the unique stable equilibrium allocation of researchers and investigate the effects on the academic sector of changes in the outside option as well as the interaction between the outside option and the researchers' concern for relative status. In any equilibrium, the right hand side of the ability distribution is allocated to the academic sector, while the left hand side of the ability distribution is allocated to the outside sector, with possible overlap between sectors and within the academic sector. The universities' qualities are determined endogenously, and we show that an increase in the value of the outside option decreases the difference in quality between the higher and lower ranked universities. Furthermore, differences in average salaries between the institutions arise endogenously.
|Date of creation:||Dec 2008|
|Contact details of provider:|| Postal: Kingston, Ontario, K7L 3N6|
Phone: (613) 533-2250
Fax: (613) 533-6668
Web page: http://qed.econ.queensu.ca/
More information through EDIRC
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.:
- Rey, Elena Del, 2001.
"Teaching versus Research: A Model of State University Competition,"
Journal of Urban Economics,
Elsevier, vol. 49(2), pages 356-373, March.
- DEL REY, Elena, "undated". "Teaching versus research: a model of state university competition," CORE Discussion Papers RP 1501, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- DEL REY, Elena, 2000. "Teaching versus research: a model of state university competition," CORE Discussion Papers 2000030, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Nicolas Carayol, 2008. "An Economic Theory of Academic Competition: Dynamic Incentives and Endogenous Cumulative Advantages," Conferences on New Political Economy, in: Max Albert & Stefan Voigt & Dieter Schmidtchen (ed.), Conferences on New Political Economy, edition 1, volume 25, pages 179-203(2 Mohr Siebeck, Tübingen.
- Nicolas Carayol, 2008. "An economic theory of academic competition: dynamic incentives and endogenous cumulative advantages," Post-Print hal-00652492, HAL.
- Avner Shaked & John Sutton, 1982. "Relaxing Price Competition Through Product Differentiation," Review of Economic Studies, Oxford University Press, vol. 49(1), pages 3-13.
- Hansmann, Henry, 1986. "A Theory of Status Organizations," Journal of Law, Economics and Organization, Oxford University Press, vol. 2(1), pages 119-130, Spring.
- Lazear, Edward P, 1997. "Incentives in Basic Research," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 167-197, January.
- Edward P. Lazear, 1996. "Incentives in Basic Research," NBER Working Papers 5444, National Bureau of Economic Research, Inc.
- Ettore Damiano & Hao Li & Wing Suen, 2010. "First In Village Or Second In Rome?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 51(1), pages 263-288, 02.
- Ettore Damiano & Hao Li & Wing Suen, 2004. "First in Village or Second in Rome," Working Papers tecipa-221, University of Toronto, Department of Economics.
- Damiano, Ettore & Li, Hao & Suen, Wing, 2005. "First in village or second in Rome?," Microeconomics.ca working papers damiano-05-01-25-10-14-13, Vancouver School of Economics, revised 26 Jan 2005.
- 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.
- Ortmann, Andreas & Squire, Richard, 2000. "A game-theoretic explanation of the administrative lattice in institutions of higher learning," Journal of Economic Behavior & Organization, Elsevier, vol. 43(3), pages 377-391, November. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:qed:wpaper:1198. 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: (Mark Babcock)
If references are entirely missing, you can add them using this form.