THE EFFECT OF WAGE DISPERSION ON SATISFACTION, PRODUCTIVITY, AND WORKING COLLABORATIVELY - EVIDENCE FROM COLLEGE AND UNIVERSITY-FACULTY

Using a large sample of college and university faculty, we studied the effects of wage inequality on satisfaction, productivity, and collaboration. Results show that the greater the degree of wage dispersion within academic departments, the lower is individual faculty members' satisfaction and research productivity and the less likely it is that faculty members will collaborate on research. The negative effects of wage dispersion on satisfaction are reduced for people who are more committed (have longer tenure), in fields with more developed scientific paradigms, and when salaries are based more on experience and scholarly productivity, but they are greater for those who earn comparatively less money. Wage dispersion has a smaller negative effect on satisfaction in private colleges and universities in which salaries are less likely to be known. The results suggest that one's position in the salary structure, the availability of information about wage inequality, and legitimate bases of reward allocation all affect the extent to which wage dispersion produces adverse effects.