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How Much Is That Star in the Window? Professorial Salaries and Research Performance in UK Universities

Gianni De Fraja (), Giovanni Facchini and John Gathergood

No 11638, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study the relationship between academic salaries and research performance. To this end, we use individual level data on the salary of all UK university professors, matched to results on the performance of academic departments from the 2014 government evaluation of research. The UK higher education sector is particularly interesting because professorial salaries are unregulated and the outcome of the official research evaluation of universities is one of their key financial and academic concerns. We first present a simple model of university pay determination, which shows that pay level and pay inequality in a department are positively related to performance. Our empirical results confirm these theoretical predictions; we also find that the pay-performance relationship is weaker for the more established and better paying universities. Our findings are also consistent with the idea that higher salaries have been used by departments to recruit academics more likely to improve their performance.

Keywords: Higher education competition; Research funding; University sector; Salary inequality; Research excellence framework (search for similar items in EconPapers)
JEL-codes: D47 H42 I28 L30 (search for similar items in EconPapers)
Date: 2016-11
New Economics Papers: this item is included in nep-cse, nep-edu and nep-sog
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