shifted markedly over the past two decades. Roughly speaking, the year 1957 (the year of Sputnik) marked a watershed. For a decade after that, salaries, student enrollments, and research funding all rose sharply. Those were the boom years. There then followed a few years when growth slowed down but during which academe held its own. The period since 1972 has been one of decline in compensation (both absolutely and relative to other occupations) and relative stability in enrollments and real research funding. The fact that these phenomena move together should not be entirely surprising. The academic like any other, is responsive to the market forces which reflect supply and demand. Demand for academics (and others holding higher degrees) is affected by several things. Significant among them are enrollments in institutions of higher education, federal funding available for research, and the level of research and development expenditure in private industry. Enrollment in higher education itself is a function of various forces. On one hand, there are demographic factors: the more persons there are in the college-age group, the higher enrollments will be. On the other hand, the fraction of those eligible to attend colleges and universities who choose to do so is, at least in part, a reflection of the economic rewards they perceive to investing in themselves. Thus, when enrollments rose in the late 1950's, in response to Sputnik and federal encouragements to increase the nation's supply of highly educated manpower, especially of scientists and engineers, the demand for staff rose. As that happened, compensation rose relative to nonacademic alternatives, and more individuals elected to enter graduate school to become academics. This trend was intensified by the government's funding of graduate fellowships to encourage further increases in the size of the scientific community. As graduate school enrollments mushroomed, the demand for faculty rose still further, and salaries mounted. The number of Ph.D.'s awarded rose from 8,938 in 1957-58 to 23,089 in 1967-68. As the increased supply of new Ph.D.'s emerged, the upward pressure on salaries diminished. Finally, by the late 1960's enrollments were no longer continuing to grow at their earlier rates, and research funding by the federal government was no longer increasing. Meanwhile the supply of new Ph.D.'s and others wishing careers continued increasing because of lags in the responsiveness of supply. While any brief statement fails to capture the richness and complexity of the marketplace, there can be little doubt that these fundamental forces were at work. They are illustrated in Tables 1, 2, and 3. In Table 1, data on salaries over the twenty-year period are given. Table 2 gives data on enrollments in institutions of higher education and the number of persons of college age. Table 3 shows data on research funding and Ph.D. production. Table 1 shows the average salaries for ANNE O. KRUEGER is Professor of Economics at the University of Minnesota and Past Chairman of Committee Z on the Economic Status of the Profession.