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

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

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

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

5. Higher School of Economics, Moscow, 2012 Private benefits from education photo Monetary benefitsNon-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.

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

7. Higher School of Economics, Moscow, 2012 Costs of education photo Private costsSocial costs  Tuition fees  Study materials  Foregone earnings  Operating costs of higher education institutions  Student support  Foregone national production related to students Source: Jongbloed, 2004, p.254.

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

9. Higher School of Economics, Moscow, 2012 Types of activity in academia photo  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?

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

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

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

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

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

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

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

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

18. Higher School of Economics, Moscow, 2012 The model photo  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 = a 0 + a 1 · Experience + a 2 · Seniority + aX Experience – number of years working, Seniority – number of years within this university

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

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

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