Incentives in Academics: Why Is There Tenure?

Abstract

This paper models an academic department as an internal labor market. The major problem facing the university administration is t o ensure that members of its departments are willing to hire the best possible candidates. Academic tenure is seen to be a necessary condi tion for this. The analysis is also consistent with other aspects of the academic environment including "tenure-track" appointments, contr act buy-outs, early retirement plans, and, when a budget crunch hits, the elimination of entire departments. The results extend in a sim ple way to other organizations in which members have an input into ov erall decisions. Copyright 1988 by University of Chicago Press.