Incentive properties of academic tenure

Index of contents

1. Introduction

2. The academic tenure system
2.1 Reasons for tenure
2.2 The process of granting tenure
2.3 Revocation of tenure

3. Model of academic tenure and contractual damages
3.1 Basic model
3.1.1 Stage 3: Department decision
3.1.2 Stage 2: Incentive compatibility constraint
3.1.3 Stage 1: Participation constraint
3.2. Cognitions

4. Empirical model of incentive, performance and academic tenure
4.1 The analysis and data set
4.2 Findings of the study
4.3 Acquired implications of tenure
4.4 Result of the analysis

5. Conclusions

References

1. Introduction

When a person is employed in a particular position, it is expected that he will work hard and perform well, regardless of his status. In the sector of Academia there are several incentives to work hard, such as promotion to full professorship and increases in the salary. Furthermore, there is also the opportunity to attain tenure, which would guarantee employment for life. As such, tenure provides possibly the strongest incentive to pursue good work.

This type of job security, however, is often criticized, as a decline of effort and productivity are expected after tenure is awarded.

This paper will investigate whether there are incentives for academics to continue to work hard, and not to slack off after tenure is granted. It will commence by explaining, the academic tenure system, in chapter 2 to understand the whole purpose of the idea of tenure, followed by an analysis of two models, in chapter 3 and 4, which will explore the role of tenure as incentive to exert effort in consideration of job security.

The first model, analysed in section 3, is a theoretically solved principal -agent problem by A. Dnes and N. Garoupa (2005). It analyses how the participants will act and how incentives should be set so that efficient work will result. The second model, by S. Li and H. Ou-Yang, analysed in chapter 4 investigates empirical data to determine if academics work hard even if after tenure has been obtained.

Finally to end this paper the main results will be summarised and relevant conclusions will be drawn.

2. The academic tenure system

Tenure is a form of job protection that professors have from their colleagues, and the special problems created by an academic democracy. Originally, it was conceived to protect faculty members' subsistence from politically and religiously powerful individuals outside of universities, as academics were often confronted with people who disagreed with controversial research findings and teachings. Tenure was established to avoid pressure on university administrations to terminate the employment of, or discipline professors.

Academic tenure is generally considered to be the main goal of most professors, and assistant professors. Since without tenure, as general rule, faculty members must retreat, or seek other academic employment, after five to seven years of service. Tenure is also a desired as it is status symbol.

2.1 Reasons for tenure

To find a fair and efficient wage system for academics is not as easy as establishing salaries for teachers, for example, since the tasks of academics are generally more complex. Academics are paid for their work in research, teaching and committee duties. And to measure their utility for the university is difficult, as the areas are overlapping, as one can see when observing that the research work is the basis for teaching as one sample.

Nevertheless, university and society more generally anticipate a high quality of work in all areas with or without the background of measurability. Thus there must be incentives for the professors to work properly, as is expected for an individual in their position.

In relevant literature there are three main reasons listed, as to why tenure has advantages, and is preferred over payment for performance.

The first is that, in the area of academic research, individuals may produce higher quality output against a background of job security and autonomy, because they are able to follow their own topics of interest. In contrast to a job without security, where they have to pursue to goals they are supposed to chase, and as a result of those guidelines, produce a lower quality of output.

Secondly as mentioned previously, the origins for tenure were to prevent professors from being dismissed for openly disagreeing with authorities or popular opinion; and this safeguard is still needed today to ensure academic freedom.

The third reason for tenure is an economic one. Employees who cannot be replaced may assess younger colleagues, as people to be mentored and exchanged knowledge with, opposed to rivals who might threaten their position.

2.2 The process of granting tenure

Until the end of the 20th century, in Germany and many other European countries, the condition for the appointment as a university professor was ‘Habilitation’, or an equivalent outstanding scientific achievement. However with the German ‘Hochschulreform’ and the ‘Hochschulrahmengesetz’ an approach to the US -American system took place.

The papers analysed in this term paper are based on the northern American tenure system, where tenure is not given immediately to a new professor after hiring. Instead the aspirant starts in the position of an assistant professor, where they work for approximately five years before a formal decision is made on whether tenure will be awarded.^[1] The German counterpart to the assistant professor is the ‘Juniorprofessor’.^[2] In comparison to their American paradigm ‘Juniorprofessor’s’ have got more independence with the acquisition of research means, and a larger freedom in teaching. However the so so-called tenure track is missing in Germany. The tenure track rules the continued employment of the scientist; whereas the ‘Juniorprofessor’ has no guarantee that they will be employed afterwards.

To get a full professorship the tenure–eligible assistant professors must be recommended by the academic department, according to their performance in teaching, research, and service over the initial period. The department's recommendation is given to a tenure review committee, comprised of faculty members, which then makes the decision whether to award tenure. The final decision is with the university’s president, who approves or vetoes the verdict.

2.3 Revocation of tenure

Revocation is a protracting and costly procedure. Tenure can only be cancelled for cause, usually only following severe misdemeanour by the professor. However this occurs very rarely and it is estimated that only 50 to 75 tenured professors, out of about 280,000, lose their tenure each year.^[3]

Possible causes for a dismissal are professional incompetence, insubordination, neglect of duty, conviction of a felony or any offence involving moral turpitude, sexual harassment or similar conducts.

3. Model of academic tenure and contractual damages

This chapter deals with the cognitions and results of Dnes’ and Garoupas model, which analyses incentive properties of academic tenure and the effect of contractual damages. The model is quite similar to other models, for example Carmichaels paper from 1988^[4], but it is enhanced by the introduction of a court, which was not observed in earlier models. The court comes into play when a dismissal of a tenured professor takes place.

The purpose of this model, in the whole context of this work, is therefore to explore the role of academic tenure on the exerted effort of a professor. Even if the model goes further by proving that tenure, in principle, can be replaced by contractual damages, this will not be considered in this paper, as it is outside of the scope.

3.1 Basic model

For simplicity Dnes and Garoupa made a few assumptions to explore the role of academic tenure. Firstly the economy is assumed to be just one department with I risk neutral incumbent professors. Each tenured faculty member has an exogenous research and teaching productivity index, a1, for pre-tenure effort^[5], and a post-tenure productivity index a2 = a1 + e -Abbildung in dieser Leseprobe nicht enthalten. Where e stands for exerted effort to provide further research output and Abbildung in dieser Leseprobe nicht enthalten is a random variable, which can be, for example, luck or misfortune in research.^[6]

The analysis of this paper is mostly concerned with post-tenure effort, as it is more interesting to explore incentives when a professor already has job security, comparing to when they are trying to gain such a position. It is more obvious that pre-tenure, a professor will exert considerable effort.

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^[1] The exact time when tenure is awarded depends on the individual. Specification of five years is only an average value.

^[2] The ‘Juniorprofessorship’ was established in 2002

^[3] Estimation published in the Wall Street Journal (January 10, 2005)

^[4] See Carmichael, H.L. (1988), he rules out the payment of “expectation” damages and concentrates on the use of tenure

^[5] to guarantee efficient effort and productivity of the professor until tenure is granted

^[6] the construction of an index a solves the problem that an academic job has high monitoring costs, as discussed by McPherson and Winston (1983) and makes the assessment of individuals quite easy for the department