Why Education? Teachers labor market: analysis of salary structure

1. Why Education?Teachers labor market: analysis of salary structure Seminar 2 IlyaPrakhov Research fellow, Centre for Institutional Studies Higher School of Economics , Moscow, 2012 www.hse.ru

2. To get started… The role of education • 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. photo photo photo Higher School of Economics , Moscow, 2012

3. Why do we need education? • 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. photo photo photo Higher School of Economics , Moscow, 2012

4. Going to university or not? • 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. photo photo photo Higher School of Economics , Moscow, 2012

5. Private benefits from education photo photo photo Source:Jongbloed, 2004, p.254. Higher School of Economics , Moscow, 2012

6. Social benefits from education photo photo photo Source:Jongbloed, 2004, p.254. Higher School of Economics , Moscow, 2012

7. Costs of education photo photo photo Source:Jongbloed, 2004, p.254. Higher School of Economics , Moscow, 2012

8. Incentives in academia • Non-monetary mechanisms: • Respect by colleagues • Reputation • Utility from academic work (vocation) • Monetary mechanisms: • Salary • Grants • External funding photo photo photo Higher School of Economics , Moscow, 2012

9. Types of activity in academia • At each moment of time: • Research • Teaching • Administration • Long-run period: • Experience • Seniority • Theoretical questions: • What types of activities should be compensated and how? • Do experience and seniority matter? photo photo photo Higher School of Economics , Moscow, 2012

10. Salary structure: research, teaching, administration • 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 photo photo photo Higher School of Economics , Moscow, 2012

11. Studying empirical evidence: research questions • 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? photo photo photo Higher School of Economics , Moscow, 2012

12. Indicators (measures) of academic activity • Discuss and offer: • Indicators of research activity • Indicators of teaching activity • Indicators of academic activity photo photo photo Higher School of Economics , Moscow, 2012

13. Indicators of research activity • 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). photo photo photo Higher School of Economics , Moscow, 2012

14. Indicators of teaching activity • 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). photo photo photo Higher School of Economics , Moscow, 2012

15. Indicators of administrative duties • 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). photo photo photo Higher School of Economics , Moscow, 2012

16. Results • 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. photo photo photo Higher School of Economics , Moscow, 2012

17. Academic salary in dynamics • 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. photo photo photo Higher School of Economics , Moscow, 2012

18. The model • Earnings equation: lnw = f(Х), where lnw – natural logarithm of salary, Х – vector of independent determinants of salary with variables of experience and seniority. lnw = a0 + a1 · Experience + a2 · Seniority + aX Experience– number of years working, Seniority – number of years within this university photo photo photo Higher School of Economics , Moscow, 2012

19. The model: effects of experience and seniority photo photo photo Higher School of Economics , Moscow, 2012

20. Possible explanations • Decline in productivity • Asymmetric information between professor and administration • Moving costs • Monopsony on academic market • Tenure contracts • Professional unions photo photo photo Higher School of Economics , Moscow, 2012

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