The Response of a Tenure-Based University System to Demographic and Budgetary Shocks by Frank T. Denton, Christine H. Feaver, and Byron G. Spencer. This paper considers the problem in a generic setting. The instruments available for optimization include hiring, tuition fees, and early retirement incentive payments, although it turns out that at most only two of the instruments are independent. The dimensions of the problem are explored by calibrating the model and carrying out simulations to see how the university would respond to particular demographic and budgetary shocks under alternative assumptions about model structure and government funding arrangements. Both initial responses and dynamic response patterns are studied.
Attention is paid to the implied stability or instability of the market for new faculty.