The Impact of the Financial Crisis on Faculty Labor Markets

Sarah E. Turner

This chapter is a preliminary draft unless otherwise noted. It may not have been subjected to the formal review process of the NBER. This page will be updated as the chapter is revised.

Chapter in forthcoming NBER book How the Financial Crisis and Great Recession Affected Higher Education, Jeffrey Brown and Caroline Hoxby, editors
Conference held September 27-28, 2012
Forthcoming from University of Chicago Press

The impact of the recent financial crisis--as well as prior cyclical downturns--on faculty hiring and wages is not well understood. An important first step is to document the basic short term relationship between budget cuts, employment levels and wages among different types of colleges and universities. The fiscal crisis brought a collision of contractions in budgets and increased student enrollment demand. As a result, faculty hiring in the junior ranks contracted sharply while student faculty ratios have increased commensurately. The magnitude and duration of these effects differs markedly across institutions. For private research universities that draw substantially on endowment income, the financial crisis produced a short--though significant--shock to revenues and, in turn, hiring. For public universities, the effects of the financial crisis are longer-lasting, with appropriations in many states continuing downward to 2012, and the impact on hiring longer lasting. The Great Recession has further widened differences between public and private universities in faculty staffing and, to some degree, salaries. As student faculty ratios have increased notably at public-sector institutions, it is natural to ask whether this decline in resources per student will adversely affect student attainment and research output in the coming years.

download in pdf format
   (547 K)

email paper

This paper is available as PDF (547 K) or via email.

This paper was revised on July 15, 2013

Machine-readable bibliographic record - MARC, RIS, BibTeX

Users who downloaded this chapter also downloaded these:
Long The Financial Crisis and College Enrollment: How Have Students and Their Families Responded?
Bettinger and Williams Federal and State Financial Aid During the Great Recession
Brown and Hoxby Introduction to "How the Great Recession Affected Higher Education"
Brown, Dimmock, and Weisbenner The Supply of and Demand for Charitable Donations to Higher Education
Brown and Tiu The Interaction of Spending Policies, Asset Allocation Strategies, and Investment Performance at University Endowment Funds
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us