Are Agricultural Experiment Station Faculty Salaries Competitively or Monopsonistically Determined?

Abstract

We examine the determinants of agricultural experiment station faculty salaries and find that productivity pays—as manifest by grantsmanship, publications, and the elicitation of competing offers—with no residual evidence of a negative seniority-salary relationship that could signal university monopsony power. This contrasts with findings in the previous literature on faculty salaries. Moreover, national market salary benchmarks, which may proxy for imperfectly observable productivity, correlate almost one-for-one with individual faculty salaries, with individual deviations from peers’ salaries proving essentially random. This evidence is much more consistent with the hypothesis that experiment station faculty salaries are determined in a competitive labor market than with the prevailing wisdom that they are set monopsonistically.