Gianni De Fraja, Giovanni Facchini, John Gathergood, 03 August 2016

The positive relationship between wages and firm performance is well established in the literature, but much less is known about the relationship in the university context. This column addresses this gap by matching professors' wages with departmental performance measures from the UK’s Research Excellence Framework. Across the full range of academic disciplines, departments that pay their professors more do appear to perform better. This is driven primarily by the relationship between salary and publications output, with no evidence of a positive relationship between salary and research impact.

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