The Pay of Finance Professors
52 Pages Posted: 1 Oct 2021 Last revised: 17 Jan 2024
Date Written: August 18, 2022
Using data from over 75,000 professors across fields and U.S. universities, we quantify a 50\% wage premium for Finance research faculty. We document a positive correlation between students' future earnings and faculty pay across fields. In addition, within fields, faculty wage elasticity to students' lifetime earnings is three times higher in Finance than in other fields. Evidence suggests that higher student earnings lead to increased university revenues. Competition for talent and fairness considerations may explain why Finance professors obtain a fraction of these additional revenues, hence accounting for a pronounced wage spill-over from the industry to academia in Finance.
Keywords: Labor and Finance, Compensation, Economics of Education, Com- petition for Talent, Rent sharing
JEL Classification: J31, I23
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