Seniority, External Labor Markets, and Faculty Pay

Authors

Byron W. Brown, Michigan State University
Stephen A. Woodbury, Michigan State University and W.E. Upjohn Institute for Employment ResearchFollow

Upjohn Author ORCID Identifier

https://orcid.org/0000-0002-4474-2415

Publication Date

1998

Source

The Quarterly Review of Economics and Finance 38(4): 771-798

Abstract

We estimate the returns to seniority (the wage-tenure profile) for university faculty, and the degree to which these returns respond to entry-level salaries (or opportunity wages)—a relationship unexplored in work to date. Using data on faculty at a Big Ten university (ours), we estimate elasticities of senior-faculty salaries with respect to entry-level salaries, and find that these elasticities decline with seniority. The evidence provides an explanation of faculty salary compression and suggests the importance of controlling for entry-level salaries in obtaining estimates of the returns to seniority.

DOI

10.1016/S1062-9769(99)80132-X

Publisher

Elsevier-ScienceDirect

Subject Areas

EDUCATION; Postsecondary education; LABOR MARKET ISSUES; Wages, health insurance and other benefits