Graduate School of Business & Public Policy
Naval Postgraduate School
555 Dyer Road
Monterey, CA 93943
NBER Working Papers and Publications
|May 2009||Why do Institutions of Higher Education Reward Research While Selling Education?|
with Dahlia K. Remler: w14974
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-abi...