Evaluating the Relationship Between Pay and Research Productivity: Panel Data Evidence from Ontario Universities

Exploiting data made available by the 1996 Ontario Public Sector Salary Disclosure Act, we construct a unique panel data set containing individual salaries of tenured and tenure-track economics professors from 16 universities in Ontario between 1996 and 2006 to evaluate the relationship between academic performance and salary. Our estimates suggest that universities reward research productivity, as a top journal publication is significantly associated with a roughly 1 percent–3 percent increase in annual salary. We interpret our results as empirical evidence of the potential importance of research productivity in determining publicly funded salaries of academics.