IDEAS home Printed from https://ideas.repec.org/p/qed/wpaper/1198.html
   My bibliography  Save this paper

Academia Or The Private Sector? Sorting Of Agents Into Institutions And An Outside Sector

Author

Listed:
  • Andrea Craig
  • Marie-Louise Viero

    (Queen's University)

Abstract

This paper develops an equilibrium sorting model with utility maximizing agents (researchers) on one side of the market, and on the other side institutions (universities) and an outside sector. Researchers are assumed to care about peer effects, their relative status within universities, and salary compensation. They differ in their concern for salary compensation as well as in their ability. We derive the unique stable equilibrium allocation of researchers and investigate the effects on the academic sector of changes in the outside option as well as the interaction between the outside option and the researchers' concern for relative status. In any equilibrium, the right hand side of the ability distribution is allocated to the academic sector, while the left hand side of the ability distribution is allocated to the outside sector, with possible overlap between sectors and within the academic sector. The universities' qualities are determined endogenously, and we show that an increase in the value of the outside option decreases the difference in quality between the higher and lower ranked universities. Furthermore, differences in average salaries between the institutions arise endogenously.

Suggested Citation

  • Andrea Craig & Marie-Louise Viero, 2008. "Academia Or The Private Sector? Sorting Of Agents Into Institutions And An Outside Sector," Working Paper 1198, Economics Department, Queen's University.
    • Handle: RePEc:qed:wpaper:1198
    as

    Download full text from publisher

    File URL: https://www.econ.queensu.ca/sites/econ.queensu.ca/files/qed_wp_1198.pdf
    File Function: First version 2008
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Lazear, Edward P, 1997. "Incentives in Basic Research," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 167-197, January.
    2. Rey, Elena Del, 2001. "Teaching versus Research: A Model of State University Competition," Journal of Urban Economics, Elsevier, vol. 49(2), pages 356-373, March.
    3. Ettore Damiano & Hao Li & Wing Suen, 2010. "First In Village Or Second In Rome?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 51(1), pages 263-288, February.
    4. Carmichael, H Lorne, 1988. "Incentives in Academics: Why Is There Tenure?," Journal of Political Economy, University of Chicago Press, vol. 96(3), pages 453-472, June.
    5. Ortmann, Andreas & Squire, Richard, 2000. "A game-theoretic explanation of the administrative lattice in institutions of higher learning," Journal of Economic Behavior & Organization, Elsevier, vol. 43(3), pages 377-391, November.
    6. Nicolas Carayol, 2008. "An economic theory of academic competition: dynamic incentives and endogenous cumulative advantages," Post-Print hal-00652492, HAL.
    7. Avner Shaked & John Sutton, 1982. "Relaxing Price Competition Through Product Differentiation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 49(1), pages 3-13.
    8. Hansmann, Henry, 1986. "A Theory of Status Organizations," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 2(1), pages 119-130, Spring.
    9. Dennis Epple & Richard Romano & Holger Sieg, 2006. "Admission, Tuition, and Financial Aid Policies in the Market for Higher Education," Econometrica, Econometric Society, vol. 74(4), pages 885-928, July.
    10. Epple, Dennis & Romano, Richard E, 1998. "Competition between Private and Public Schools, Vouchers, and Peer-Group Effects," American Economic Review, American Economic Association, vol. 88(1), pages 33-62, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dirk Bergemann & Marco Ottaviani, 2021. "Information Markets and Nonmarkets," Cowles Foundation Discussion Papers 2296, Cowles Foundation for Research in Economics, Yale University.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Su, Xuejuan & Kaganovich, Michael, 2012. "College Expansion and Curriculum Choice," Working Papers 2012-25, University of Alberta, Department of Economics, revised 01 Apr 2015.
    2. Eisenkopf, Gerald & Wohlschlegel, Ansgar, 2012. "Regulation in the market for education and optimal choice of curriculum," Journal of Urban Economics, Elsevier, vol. 71(1), pages 53-65.
    3. Fridman, A. & Verbetskaia, M., 2020. "Government regulation of the market for higher education," Journal of the New Economic Association, New Economic Association, vol. 45(1), pages 12-43.
    4. repec:clu:wpaper:0607-14 is not listed on IDEAS
    5. Miguel Urquiola & Eric Verhoogen, 2009. "Class-Size Caps, Sorting, and the Regression-Discontinuity Design," American Economic Review, American Economic Association, vol. 99(1), pages 179-215, March.
    6. Alexander Kemnitz, 2007. "University Funding Reform, Competition, and Teaching Quality," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 163(2), pages 356-378, June.
    7. Michael Kaganovich & Xuejuan Su, 2019. "College curriculum, diverging selectivity, and enrollment expansion," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 67(4), pages 1019-1050, June.
    8. Jens Prüfer & Uwe Walz, 2013. "Academic faculty governance and recruitment decisions," Public Choice, Springer, vol. 155(3), pages 507-529, June.
    9. Damiano, Ettore & Li, Hao & Suen, Wing, 2012. "Competing for talents," Journal of Economic Theory, Elsevier, vol. 147(6), pages 2190-2219.
    10. Carayol, Nicolas & Dalle, Jean-Michel, 2007. "Sequential problem choice and the reward system in Open Science," Structural Change and Economic Dynamics, Elsevier, vol. 18(2), pages 167-191, June.
    11. Chakrabarti, Rajashri, 2013. "Do vouchers lead to sorting under random private school selection? Evidence from the Milwaukee voucher program," Economics of Education Review, Elsevier, vol. 34(C), pages 191-218.
    12. Kealey, Terence & Ricketts, Martin, 2014. "Modelling science as a contribution good," Research Policy, Elsevier, vol. 43(6), pages 1014-1024.
    13. Joseph G. Altonji & Ching-I Huang & Christopher R. Taber, 2015. "Estimating the Cream Skimming Effect of School Choice," Journal of Political Economy, University of Chicago Press, vol. 123(2), pages 266-324.
    14. Loumeau, Gabriel, 2023. "Locating Public Facilities: Theory and Micro Evidence from Paris," Journal of Urban Economics, Elsevier, vol. 135(C).
    15. Robert J. Gary-Bobo & Alain Trannoy, 2005. "Efficient Tuition & Fees, Examinations, and Subsidies," IDEP Working Papers 0501, Institut d'economie publique (IDEP), Marseille, France, revised 01 Mar 2005.
    16. Dennis Epple & Richard Romano & Sinan Sarpça & Holger Sieg & Melanie Zaber, 2019. "Market power and price discrimination in the US market for higher education," RAND Journal of Economics, RAND Corporation, vol. 50(1), pages 201-225, March.
    17. Dur, Robert & Glazer, Amihai, 2008. "Subsidizing Enjoyable Education," Labour Economics, Elsevier, vol. 15(5), pages 1023-1039, October.
    18. Joan Rosselló, 2007. "Does a public university system avoid the stratification of public universities and the segregation of students?," DEA Working Papers 26, Universitat de les Illes Balears, Departament d'Economía Aplicada.
    19. Liu, Ting & Albert Ma, Ching-to & Mak, Henry Y., 2018. "Incentives for motivated experts in a partnership," Journal of Economic Behavior & Organization, Elsevier, vol. 152(C), pages 296-313.
    20. Nirav Mehta, 2017. "Competition In Public School Districts: Charter School Entry, Student Sorting, And School Input Determination," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 58(4), pages 1089-1116, November.
    21. Epple, Dennis & Romano, Richard & Sarpça, Sinan & Sieg, Holger, 2017. "A general equilibrium analysis of state and private colleges and access to higher education in the U.S," Journal of Public Economics, Elsevier, vol. 155(C), pages 164-178.

    More about this item

    Keywords

    Sorting; Universities; Researchers; Academia; Peer effects; Ranking;
    All these keywords.

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:qed:wpaper:1198. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mark Babcock (email available below). General contact details of provider: https://edirc.repec.org/data/qedquca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.