Academic salary compression across disciplines and over time

Abstract

Academic salary compression occurs when professors of lower professorial rank earn salaries close to—or even higher than—salaries of more senior faculty. We present a modified maximum likelihood method for fitting flexible Dagum distributions to limited data that provide only the minimum, maximum, mean, and sample size, and we use this method to study salary compression across 15 academic disciplines over the past 22 years. After examining mean-based compression ratios, we estimate salary percentiles and explore stochastic dominance relationships between estimated salary distributions for different disciplines and professorial ranks. Although salary compression is not seen in most academic disciplines, it is prevalent in business-related disciplines, is increasing in these disciplines, and exhibits examples of stochastic dominance. In addition, salary compression increases as competing nonacademic salaries increase. Finally, we evaluate our methodology, showing that it would likely be useful in a variety of settings.