The American Economic Association is the primary professional society for economists and publishes a total of nine academic journals. The Journal of Economic Perspectives (JEP) fills the gap between the general interest press and academic economics journals and attempts to make academic research increasingly accessible to non-experts in the particular fields of analysis. As such it is an excellent source of information for economist and informed readers about specialized research topics in economics.
The journal’s format is to publish two or three symposia in each issue with coverage consisting of two to four articles on each topic. For example, the Winter 2021 issue lists three symposia topics: (1) Minimum Wage, (2) Polarization in Courts, and (3) Economics of Higher Education. Often symposia from the JEP are used as sources of assigned readings for advanced undergraduate courses in economics to introduce students to current economic research in topical areas or to illustrate and summarize what important findings economic research can shed on a variety of public policy issues.
The Minimum Wage symposium might well serve such a purpose in either a labor economics or macroeconomic policy course. Most JEP articles are solicited by the editors to synthesize research findings from standard high-quality academic journals and present them to an informed more general audience. Care is taken to present results of contemporary research studies in order to better inform public policy debates and stimulate collaboration in a cross-disciplinary framework. The AEA has implemented the policy of giving free online public access for all issues of JEP (1987-present).
We expect the readership of the ACAD Leader will benefit from our summaries of the JEP’s Economics of Higher Education collection of papers. In highlighting these three topics of interest to higher education administrators, we hope to convey the importance of these economic perspectives. The following link is provided to a copy of the complete Winter 2021 issue (https://www.aeaweb.org/full_issue.php?doi=10.1257/jep.35.1). Anticipating that some readers will wish to explore the articles in further depth, the reference section includes links to copies of each of the articles. The coverage is of three topical areas in US higher education: (1) the place of international students in the current US higher education system, (2) the long-term evolution of the role of research at U.S. universities, and (3) a study of goals and tradeoffs in staffing higher education classrooms.
The Globalization of Postsecondary Education: The Role of International Students in the US Higher Education System (Bound, et. al., 2021)
The study investigates the effect of international students on the U.S .higher education system and the broader economy motivated by the fact that U.S. colleges and universities have experienced accelerating growth trends over the past three decades leading to unprecedented numbers of incoming international students, only to be halted by the COVID-19 crisis. The main factors are examined which are responsible for directing international students to target foreign education overall and American education in particular. The economic impact of international students in broader terms has made higher education a major export of the U.S. economy, generating revenues close in magnitude to the total export value of soybeans, corn, and textile suppliers combined. More importantly, participation of students from abroad in U.S. higher education affects the global production of skills and alters the allocation of university-educated workers to labor markets within the United States and abroad. On the supply side of higher education, U.S. colleges and universities have realized the opportunity to recruit talented students and, in some cases, to generate significant revenue.
One of the main reasons underlying the upward trend is the presence of a variety of degree programs rarely available in other countries, including liberal arts colleges and other broad-based programs of study, along with a greater supply of selective and resource-intensive options at the graduate level combined with the attractive benefit of obtaining an easier pathway into U.S. employment options.
Changes in educational attainment and personal income across developing countries have been a major driver in the overall growth in demand from abroad for U.S. post-secondary education. Countries that experience higher income growth produce higher outflows of students studying abroad while developing economic conditions raise significantly the personal and societal returns to investments in education and universities. Higher incomes drive the ability to pay and demand for higher quality US-based higher education while at the same time producing higher returns to these investments both for the individual students and the societies in which they work. These effects can in turn be dampened via political tension between the U.S. and the sending country, more rigid immigration policies in the host country that hinder transitions to employment, and significant increases forthcoming in the higher education infrastructure in developing countries.
Important differences exist in the economic impact of alternative categories of international students: undergraduates, master’s level, and Ph.D. students. Undergraduates and masters students are more sensitive to income growth in the home country since they are more likely to pay a larger share of tuition, while Ph.D. students expect to have their tuition and fees waived by graduate school funding. Foreign students studying at the master’s level represent a significant source of revenue in both public and private sectors of U.S. higher education and provide an important source of revenue for public research universities facing declining state appropriations.
International students significantly impact the labor market and are more likely than domestic students to pursue degrees in science, technology, and mathematics, which in turn may dilute per-student resources and push domestic students toward concentrating in other fields. This crowding out should be most prevalent where there are capacity constraints. As a result, the job market will have a heterogeneous distribution of American and foreign students with some professions being highly dominated by either one of the groups but generating an increased supply of high-skill foreign workers who may be willing to accept a lower wage as a tradeoff for entry into further employment-based training via lengthened Optional Practical Training (OPT) opportunities for STEM graduates. Growth in the student visa reservoir, comprised of students persisting with OPTs, increases the supply of foreign-born college educated workers in the United States and lengthens the queue for employment visas such as the H-1B and employment-based permanent residency.
To mitigate the risk of a decrease in international students outflows to the United States, many universities have started diversifying their portfolios in terms of origin. Some have opted for insurance coverage for losses in foreign student revenue.
Why Does the United States Have the Best Research Universities? Incentives, Resources, and Virtuous Circles (MacLeod and Urquiola, 2021)
A framework is presented for study of the path which universities followed in motivating research beginning in the 1870s. In the latter half of the 19th century universities were still dependent on sorting to attract students from very similar ethnic and religious affiliations rather than on the basis of performance and abilities. The process was deemed ineffective in serving the long-term performance of universities as it gave incentives to using the abilities of students and professors in selection and hiring processes. Institutions that discriminated left opportunities for those which didn’t choose to discriminate. With innovative competition from new entrants such as Cornell and Johns Hopkins, by the early 1900s, universities moved to build research in part by offering incentives for professors. This was mainly justified by the agency theory that states that individuals respond to rewards shaped by performance measures. Specialized journals started gaining prominence and the organization of professors into disciplines was crucial in order to have improved comparability on research performance. As the subjects offered by schools became less relevant toward meeting the skills needed in industry and agriculture, these reforms produced growth for educational innovators. Leading universities also shifted to alternative sorting of students by relying on selective admissions to attract high-ability and high-income students.
Improving research productivity meant strategizing to reduce the return to outside activities in competition with for faculty effort. Schools started varying compensation for professors with research output by offering more successful professors a higher salary. Universities that adopted the new reforms noticed increased competition from universities that aimed to become research universities as well. This led to more funding from both the public and private sector. This process stood in stark contrast to the situation in Europe, where the state-controlled and funded universities were driven by non-research objectives.
As the competition for research talent heightened, the supply of PhD-trained specialists grew. Faculty members founded professional associations, like the American Chemical Society (1877), the American Historical Association (1884), and the American Economic Association (1885). These associations began to publish journals, which were considered arbiters of research performance, and at this time the United States started catching up with Europe, where academic societies and specialized journals had existed long before. U.S. schools attracted research professors by offering higher salaries, reduced teaching loads, and sabbaticals.
Selectivity in admissions along with high tuition payments and donations provided a virtuous circle for universities who were early adopters. Schools relied on the most talented faculty and compensated them for their research performance and even introduced tenure, a significant reward given to professors for reaching a high threshold level of performance. This reward structure helped in establishing a non-bias hiring process of new professors as faculty members with tenure had lessened incentives to misrepresent the quality of new hires. Selectivity of admissions and improved faculties resulted in outstanding networks for students in producing valuable job contacts. Satisfied alumni produced increased donations, allowing each school to make more investments. In short, complementary and self-reinforcing dynamics concentrated research talent and enabled U.S. schools to develop the largest and most productive set of research universities.
Staffing the Higher Education Classroom (Figlio and Schapiro, 2021)
The empirical basis for this analysis is anchored in data from Northwestern University and looks at the factors relied on for staffing of higher education classrooms. The authors investigate factors that influence what students experience in the undergraduate classroom by considering both the teaching and research output of faculty members while controlling for other factors.
The primary question is whether the most accomplished teachers sacrifice in terms of their scholarship, and alternatively whether relatively poor teachers make up for it in research excellence. The hope is to better understand the extent and conditionality underlying a teaching-research tradeoff. Two criteria were developed to measure teaching and research effectiveness and the study also illuminates results of student evaluations in terms of bias by gender, race, or ethnicity.
Teaching effectiveness is quantified by the ability of faculty members to attract students to the major, measured by the likelihood that students take additional courses in the subject, and normalized performance in additional courses. Deep learning takes into consideration the performance of the student in the instructor’s class as well as the subsequent related classes while relying on standardized test scores as controls. The primary finding is that those who are most successful in inspiring students to pursue majors in their subject are not any more able to facilitate deep learning and the correlation between the two measures of teaching quality is virtually zero.
Exploring the existence of a tradeoff between research and teaching excellence is modeled relying on the scholarly accomplishments of faculty members constructed from a within-department indicator of scholarly work based on frequency and scholarly influence of publications. The results show that there is no apparent relationship between teaching quality and research quality. In sum, regardless of the measure of teaching effectiveness or exemplary scholarship, top teachers are no more or less likely to be especially productive scholars than their less accomplished teaching peers. The findings suggest that superb teaching does not come at the cost of diminished scholarship. The factors that drive teaching excellence and those that determine research excellence are seemingly unrelated.
These results have implications for university administrators and policymakers. Policy makers should not be worried about research excellence coming at the expense of teaching or vice versa since the results have shown that they are unrelated. The results, however, imply that top researchers who don’t teach exceptionally well offer an opportunity for more cost-effectiveness by replacing them in the classroom either with untenured, lower paid professors, or with faculty not on tenure track. The results may not generalize to other universities and may have a degree of error related to the criteria used to evaluate learning and teaching effectiveness.
The proportion of tenured faculty members in U.S. higher education has been dropping precipitously over the past several decades. This decline is explained in part by end-of-career uncertainties associated with tenured positions and the shifting of more instruction to contingent faculty members to mitigate that risk. To contextualize the tradeoff, it is important to know if students taught by contingent faculty members learn as much as those taught by tenure-track faculty members. There are contrasting findings in the literature. Some find that contingent faculty lower graduation rates, others have found evidence of a stronger induced student interest in subject matter, measured by the likelihood that students take additional courses in the subject. The present study suggests that on average, first-term first-year students learn more from contingent faculty members than they do from tenure-track faculty members. The main result is that instructional quality gap between tenure line and contingent faculty members is concentrated in a relatively small fraction of the teaching force in the lower end of the teaching quality range.
The study finds that contingent faculty members are modestly more likely to convert students into majors, so the benefits of taking courses with contingent faculty members appear to be stronger for the relatively marginal students in the sample from Northwestern University. The rise of full-time designated teachers at U.S. colleges and universities may not be an alarming signal for the quality of teaching. This study finds that the gap in teaching performance between tenure line and contingent faculty members depends entirely on the weakest teachers among the tenured professors. There is no significant tradeoff between great teaching and research and having top research faculty in tenure positions is both advantageous/disadvantageous to the school since the research power of the faculty reflects the academic standing and potential of the school while it also means higher salaries and risks of end-of-career uncertainties.
The multitasking challenge of staffing faculty in classrooms isn’t easy to solve and measuring both the teaching and research performance of faculty members should be a good starting point. Universities may shift to hiring contingent faculty and shift away from tenured professors; however, they should also take into consideration the impact that this may have on reputation if it is dependent on the quality of the research output of the faculty. Balancing the hiring of tenure-track and contingent faculty members ought to be closely investigated while taking into consideration the effect that this may have on the quality of teaching as well as the university’s research standing. This tradeoff demonstrates significant heterogeneity across U.S. institutions of higher education.
To further explore the details and conclusions of these studies please use the links below to access the published articles.
Bound, John, Breno Braga, Gaurav Khanna, and Sarah Turner, The Globalization of Postsecondary Education: The Role of International Students in the US Higher Education System, Journal of Economic Perspectives, Vol. 35, No. 1, Winter 2021, pp. 163-84. https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.35.1.163
Figlio, David and Morton Schapiro, Staffing the Higher Education Classroom, Journal of Economic Perspectives, Vol. 35, No. 1, Winter 2021, pp. 143-62. https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.35.1.143
MacLeod, W. Bentley and Miguel Urquiola, Why Does the United States Have the Best Research Universities? Incentives, Resources, and Virtuous Circles, Journal of Economic Perspectives, Vol. 35, No. 1, Winter 2021, pp. 185-206. https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.35.1.185