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Why Education? Teachers labor market: analysis of salary structure Seminar 2 Ilya Prakhov Research fellow, Centre for Institutional Studies Higher School.

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Presentation on theme: "Why Education? Teachers labor market: analysis of salary structure Seminar 2 Ilya Prakhov Research fellow, Centre for Institutional Studies Higher School."— Presentation transcript:

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

21 20, Myasnitskaya str., Moscow, Russia, 101000 Tel.: +7 (495) 628-8829, Fax: +7 (495) 628-7931 www.hse.ru


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