Faculty salaries and the maximization of prestige

Through the lens of the emerging economic theory of higher education, we look at the relationship between salary and prestige. Starting from the premise that academic institutions seek to maximize prestige, we hypothesize that monetary rewards are higher for faculty activities that confer prestige. We use data from the 1999 National Study of Postsecondary Faculty (NSOPF), and regression analysis to examine the determinants of salaries. The results are consistent with the theory that faculty members are financially rewarded for enhancing institutional prestige. There is some evidence that the rewards are higher in science and engineering. Spending more time on teaching has no effect on salary, even in comprehensive universities and liberal arts colleges. Findings suggest that other types of institutions are emulating research institutions in their pursuit of prestige. Looking at faculty salaries through this lens raises serious questions about the implications of the current reward system in higher education.