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Productivity in Higher Education$
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Caroline M. Hoxby and Kevin Stange

Print publication date: 2019

Print ISBN-13: 9780226574585

Published to Chicago Scholarship Online: September 2020

DOI: 10.7208/chicago/9780226574615.001.0001

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Faculty Deployment in Research Universities

Faculty Deployment in Research Universities

(p.177) 6 Faculty Deployment in Research Universities
Productivity in Higher Education

Paul N. Courant

Sarah Turner

University of Chicago Press

Deploying faculty efficiently should surely be part of any optimizing strategy of a college or university. The “theory of the firm” shows how a university would achieve productive efficiency given different faculty salary rates across disciplines and variation in compensation within departments. The prices of faculty activities demonstrate substantial variation, which raises questions about how cost differences affect resource allocation at research universities. Examining variation in teaching allocations and costs is complicated because teaching and research are jointly produced by universities while being substitutes at some margin in faculty time allocation. We examine the link between departmental compensation and student course offerings at two major public research universities. We find that faculty compensation per student taught varies less across departments than salary levels. In turn, changes over time in relative salaries by discipline are larger than changes in faculty compensation per student as universities adjust to cost pressures by increasing class size and teaching inputs from other sources. We find that within departments the highest-paid faculty teach fewer undergraduate courses than their lower-paid colleagues. This confirms our hypothesis that salaries are determined principally by research output and reputation, and that universities respond rationally to relative prices in deploying faculty.

Keywords:   faculty salaries, teaching costs, higher education production function, teaching loads

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