The Efficiency of Tenure Contracts in Academic Employment
33 Pages Posted: 17 Oct 2015
Date Written: October 17, 2015
Academic research is a public good whose production is supported by the tuition- paying students that a faculty’s research accomplishments attract. A professor’s spot contribution to the university’s revenues thus depends not on her spot research production, but rather on her entire cumulative research record. We show that, under a broad range of education market conditions, a profit-maximizing university will apply a high minimum retention standard to the research production of a junior professor who has no record of past research, but a zero minimum standard to the spot production of a more senior professor whose background includes accomplishments sufficient to have cleared the high probationary hurdle. But if and when education market conditions change, tenure-based contracts may cease to be optimal.
Keywords: tenure, academic employment, academic research
JEL Classification: I23, J41
Suggested Citation: Suggested Citation