Why Education? Teachers labor market: analysis of salary structure

Why Education?Teachers labor market: analysis of salary

structure

Seminar 2

Ilya PrakhovResearch fellow, Centre for Institutional Studies

Higher School of Economics , Moscow, 2012www.hse.ru

Higher School of Economics , Moscow, 2012

To get started… The role of education

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Discuss the following issues in small groups:

People are poor because they did not work hard enough in school and dropped out.

Countries should invest in education mainly because education affects economic growth rates.


Why do we need education?

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Education is a merit good, which brings private benefits (for students) as well as social benefits (for society as a group of individuals).

This justifies the existence of social costs concerned with education in addition to private costs.


Going to university or not?

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Consumption (short-run reason): utility from education.

Investment (long-run reason): investment in human capital. This investment is made in order to get higher return from education: increase in salary compared to less educated people. It is true under assumption that education raises productivity, which, in turn, should be compensated by higher wages.


Private benefits from education

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Monetary benefits Non-monetary benefits

Greater productivity Higher net earnings Employment Better job opportunities Higher savings Personal and professional

mobility

Educational consumption Improved working conditions Increased personal status Higher job satisfaction Healthier life style Improved quality of life (also for

siblings) More informed decision making More hobbies and value of leisure Personal development

Source: Jongbloed, 2004, p.254.


Social benefits from education

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Monetary benefits Non-monetary benefits

Economic growth Higher tax revenue National and regional

development More flexible labor

force Increased consumption Reduced reliance on

government financial support

Social cohesion, appreciation of social diversity and cultural heritage

Social mobility Reduced crime rates Improved health More donations and charity work Increased capacity to adapt to new

technologies Democratic participation Improved basic and secondary

education



Costs of education

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Private costs Social costs Tuition fees Study materials Foregone earnings

Operating costs of higher education institutions

Student support Foregone national production

related to students



Incentives in academia

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Non-monetary mechanisms:Respect by colleaguesReputationUtility from academic work (vocation)

Monetary mechanisms:SalaryGrantsExternal funding


Types of activity in academia

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At each moment of time:ResearchTeachingAdministration

Long-run period:ExperienceSeniority

Theoretical questions: What types of activities should be compensated and how?Do experience and seniority matter?


Salary structure: research, teaching, administration

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Approaches to salary formation: According to productivity According to expected productivity According to results

Potential concerns and difficulties: Asymmetric information between professor and/or

university management, other universities


Studying empirical evidence: research questions

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Static aspect: Which indicators (determinants) are ‘good enough’

and can be used in evaluation of productivity in academia?

Is it true that each factor positively affects salary?

Dynamic aspect:What is the influence of experience and seniority

on salary in academia?


Indicators (measures) of academic activity

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Discuss and offer:Indicators of research activityIndicators of teaching activityIndicators of academic activity


Indicators of research activity

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Number of books published/edited (Katz, 1973; Siegfried, White, 1973; Tuckman, Hageman, 1976; Gomez-Mejia, Balkin, 1992);

Number of published papers (Katz, 1973; Siegfried, White, 1973; Tuckman, Hageman, 1976; Gomez-Mejia, Balkin, 1992; Fairweather, 1993);

Number of papers published in high quality journals (Katz, 1973; Siegfried, White, 1973; Gomez-Mejia, Balkin, 1992);

Number of monographs (Siegfried, White, 1973);Number of dissertations supervised by professor (Katz, 1973);Citation count (Gomez-Mejia, Balkin, 1992);Time devoted to research (Fairweather, 1993);Number of externally funded projects (Fairweather, 1993).


Indicators of teaching activity

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Rating of professor (Katz, 1973);Average score based on students’ recommendations

(Siegfired, White, 1973);Students’ and administrators’ opinion about quality of

teaching (Gomez-Mejia, Balkin, 1992);Teaching awards (Tuckman, Hageman, 1976);Number of dissertations supervised by professor (Katz,

1973);Time devoted to teaching (Fairweather, 1993);Teaching bachelor students only (Fairweather, 1993);Teaching post-graduate students (Fairweather, 1993).


Indicators of administrative duties

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Professor held administrative position in the past (Katz, 1973; Tuckman, Hageman, 1976);

Professor currently holds administrative position (Katz, 1973; Tuckman, Hageman, 1976);

Time devoted to administrative duties (Katz, 1973).


Results

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Katz, 1973. The main predictor of salary - publications. Teaching: students’ evaluation is not significant, but supervising has positive effects. Administrative work has significant, but modest effect on salary.

Siegfired, White, 1973. Greatest effect – publications in national or specialized journals. Administrative duties have strong positive effect. Teaching is significant only at 10% interval.

Tuckman, Hagemann, 1976. The main factor – number of articles published. Books matter. Teaching is insignificant. Administrative duties have positive effects.

Gomez-Mejia, Balkin, 1992. The main determinant of salary – publications in refereed journals of a high quality. Teaching matters only for the most successful researchers.


Academic salary in dynamics

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Why higher experience should be compensated by higher salary?

Results, which were obtained on academic labor market do not correspond with those, which were obtained on non-academic labor market.


The model

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Earnings equation:

ln w = f(Х), where

ln w – natural logarithm of salary,Х – vector of independent determinants of salary with variables of experience and seniority.

ln w = a0 + a1 · Experience + a2 · Seniority + aX

Experience – number of years working,Seniority – number of years within this university


The model: effects of experience and seniority

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Possible explanations

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Decline in productivityAsymmetric information between professor and

administration Moving costsMonopsony on academic marketTenure contractsProfessional unions

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Why Education? Teachers labor market: analysis of salary structure

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