A Bayesian look at American academic wages: From wage dispersion to wage compression

Majda Benzidia and Michel Lubrano
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Majda Benzidia: AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique

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Abstract: OECD countries have experienced a large increase in top wage inequality. Atkinson (2008) attributes this phenomena to the superstar theory leading to a Pareto tail in the wage distribution with a low Pareto coefficient. Do we observe a similar phenomena for academic wages? We examine wage formation in a public US university using for each academic rank a hybrid mixture formed by a lognormal distribution for regular wages and a Pareto distribution for top wages, using a Bayesian approach. The presence of superstars wages would imply a higher dispersion in the Pareto tail than in the lognormal body. We concluded that academic wages are formed in a different way than other top wages. There is an effort to propose competitive wages to some young Assistant Professors. But when climbing up the wage ladder, we found a phenomenon of wage compression which is just the contrary of a superstar phenomenon.

Keywords: Superstar wages; Academic market; Bayesian inference; Hybrid mixtures; Tournaments theory; Wage formation; Wage compression (search for similar items in EconPapers)
Date: 2020-06
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Published in Journal of Economic Inequality, 2020, 18 (2), pp.213-238. ⟨10.1007/s10888-019-09431-9⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02566630

DOI: 10.1007/s10888-019-09431-9

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