Would Reducing Tenure Probabilities Increase Faculty Salaries?

32 Pages Posted: 10 Jun 2000 Last revised: 30 Jul 2022

See all articles by Ronald G. Ehrenberg

Ronald G. Ehrenberg

ILR-Cornell University; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Paul J. Pieper

University of Illinois at Chicago - Department of Economics

Rachel A. Willis

University of North Carolina (UNC) at Chapel Hill - Curriculum in American Studies

Date Written: June 1995

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.

Suggested Citation

Ehrenberg, Ronald G. and Pieper, Paul J. and Willis, Rachel A., Would Reducing Tenure Probabilities Increase Faculty Salaries? (June 1995). NBER Working Paper No. w5150, Available at SSRN: https://ssrn.com/abstract=225214

Ronald G. Ehrenberg (Contact Author)

ILR-Cornell University ( email )

Higher Education Research Institute
Ithaca, NY 14853-3901
United States
607-255-3026 (Phone)
607-255-4496 (Fax)

National Bureau of Economic Research (NBER) ( email )

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IZA Institute of Labor Economics ( email )

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Paul J. Pieper

University of Illinois at Chicago - Department of Economics

725 University Hall (UH)
Chicago, IL 60607-7121
United States

Rachel A. Willis

University of North Carolina (UNC) at Chapel Hill - Curriculum in American Studies ( email )

Chapel Hill, NC 27599
United States

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