Would Reducing Tenure Probabilities Increase Faculty Salaries?

Ronald Ehrenberg, Paul Pieper () and Rachel A. Willis

No 5150, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The simplest competitive labor market model asserts that if tenure is a desirable job characteristic for professors, they should be willing to pay for it by accepting lower salaries. Conversely, if an institution unilaterally reduces the probability that its assistant professors receive tenure, it will have to pay higher salaries to attract new faculty. Our paper tests this theory using data on salary offers accepted by new assistant professors at economics departments in the United States during the 1974-75 to 1980-81 period, along with data on the proportion of new Ph.Ds hired by each department between 1970 and 1980 that ultimately received tenure in the department or at a comparable or higher quality department. We find evidence that a tradeoff did exist. Equally important, departments that offer low tenure probabilities to assistant professors also paid higher salaries to their tenured faculty. We attribute this to their need to pay higher salaries to attract tenured faculty from the external market.

JEL-codes: J44 (search for similar items in EconPapers)
Date: 1995-06
Note: LS
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published as (Published as "Do Economics Departments with Lower Tenure Probabilities Pay Higher Faculty Salaries?") Review of Economics and Statistics, Vol. 80(November 1998): 503-512.

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