 A Theory of Tenure for the Teaching UniversityZhiqi Chen and J. Stephen Ferris Carleton Economic Papers from Carleton University, Department of Economics Abstract: In this paper we challenge the presumption that academic tenure is an outmoded institutional form for the small teaching university. Starting from the premise that tenure is granted on the basis of research (reflected in a minimum required number of publications), we argue that tenure has value for a university concerned solely with teaching (as opposed to research) because research enhances human capital and incentives for its accumulation are necessary to improve the quality of faculty teaching over the lifecycle. However, while human capital accumulation and research effort create future value, contracting on either basis is not feasible because neither can be measured objectively. Numbers of publications, the usual proxy for research, meter the desired activity only imperfectly due to randomness in the publication process. In these circumstances, an employment contract that offers tenure, compared with contracts that a) reward only teaching and b) supplement teaching payments with a direct reward for publications, can better generate the optimal level of human capital. The minimum publication requirement of the tenure contract induces the optimal level of research with less variation in expected income, avoiding inefficient behavioural responses to the greater riskiness of a contract rewarding only realised publications. Copyright 1999 by Blackwell Publishers Ltd/University of Adelaide and Flinders University of South Australia Keywords: contract theory; organizational form; university tenue; risk aversion; comparative economic institutions (search for similar items in EconPapers) Published: – revised version in Australian Economic Papers, Vol. 38, No. 1 (January 1999), pp. 9–25 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:car:carecp:95-12 Ordering information: This working paper can be ordered from Access Statistics for this paper More papers in Carleton Economic Papers from Carleton University, Department of Economics C870 Loeb Building, 1125 Colonel By Drive, Ottawa Ontario, K1S 5B6 Canada. |
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