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University vice-chancellor pay, performance and (asymmetric) benchmarking

Author

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  • Adelina Gschwandtner
  • Richard McManus

Abstract

We study the pay of UK universities chief executives (‘vice-chancellors’) over a ten year period. Although there is a correlation between pay and performance, with better performing institutions paying higher salaries, we find limited evidence that this relationship is causal; that is, we find no statistically significant link that a change in pay leads to a change in performance, or vice-versa. Instead, we find strong support for an asymmetric benchmarking behaviour, where those institutions with below average pay increase their vice-chancellor’s salaries quicker than those with above average pay. We simulate a model whereby different institutions target different places of the distribution of salaries and demonstrate that inflation of pay can be explained by this behaviour.

Suggested Citation

  • Adelina Gschwandtner & Richard McManus, 2018. "University vice-chancellor pay, performance and (asymmetric) benchmarking," Studies in Economics 1807, School of Economics, University of Kent.
    • Handle: RePEc:ukc:ukcedp:1807
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    File URL: https://www.kent.ac.uk/economics/repec/1807.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Executive Compensation; Performance Pay; Efficiency Wages; Benchmark;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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