Why Do Institutions of Higher Education Reward Research While Selling Education?

42 Pages Posted: 26 May 2009 Last revised: 8 Jun 2009

See all articles by Dahlia Remler

Dahlia Remler

City University of New York - Baruch College - Marxe School of Public and International Affairs; National Bureau of Economic Research (NBER); CUNY The Graduate Center - Department of Economics

Elda Pema

Naval Postgraduate School

Date Written: May 2009

Abstract

Higher education institutions and disciplines that traditionally did little research now reward faculty largely based on research, both funded and unfunded. Some worry that faculty devoting more time to research harms teaching and thus harms students' human capital accumulation. The economics literature has largely ignored the reasons for and desirability of this trend. We summarize, review, and extend existing economic theories of higher education to explain why incentives for unfunded research have increased. One theory is that researchers more effectively teach higher order skills and therefore increase student human capital more than non-researchers. In contrast, according to signaling theory, education is not intrinsically productive but only a signal that separates high- and low-ability workers. We extend this theory by hypothesizing that researchers make higher education more costly for low-ability students than do non-research faculty, achieving the separation more efficiently. We describe other theories, including research quality as a proxy for hard-to-measure teaching quality and barriers to entry. Virtually no evidence exists to test these theories or establish their relative magnitudes. Research is needed, particularly to address what employers seek from higher education graduates and to assess the validity of current measures of teaching quality.

Suggested Citation

Remler, Dahlia and Pema, Elda, Why Do Institutions of Higher Education Reward Research While Selling Education? (May 2009). NBER Working Paper No. w14974. Available at SSRN: https://ssrn.com/abstract=1408894

Dahlia Remler (Contact Author)

City University of New York - Baruch College - Marxe School of Public and International Affairs ( email )

135 E 22nd St
New York, NY 10010
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

CUNY The Graduate Center - Department of Economics ( email )

365 Fifth Avenue, 5th Floor
New York, NY 10016
United States

Elda Pema

Naval Postgraduate School ( email )

United States

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