Seniority, External Labor Markets, and Faculty Pay
Upjohn Institute Staff Working Paper 95-37
Byron W. Brown and Stephen A. Woodbury
July 1995
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 both 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.
NOTE: A revised version of this paper appears in Quarterly Review of Economics and Finance, Vol. 38(4), 771-798, 1998.
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