SO YOU WANT TO EARN A Ph.D. IN ECONOMICS: HOW MUCH DO YOU THINK YOU'LL MAKE?

JOHN J. SIEGFRIED [*] Using data from individuals who earned a Ph.D. in economics in 1996-97, this study identifies factors associated with securing full-time permanent positions and determinants of starting salaries for new Ph.D. economists. Where individuals attend graduate school and factors including the field of specialization and work as a teaching/research assistant impact whether graduates obtain full-time permanent jobs. Choice of graduate program and amount of time spent in the program influence starting salary, as does obtaining a position outside academia or in a research-oriented academic institution, both of which entail higher salaries relative to employment at a B.A.-level academic institution. (JEL J44, A10) 1. INTRODUCTION The job market for economists continues to be the focus of empirical studies that provide information on initial job placement, the market process, and differential market outcomes by age, sex, and graduate program rank for new Ph.D. economists (Carson and Navarro, 1988; Barbezat, 1992; Formby et al., 1993; McMillen and Singell, 1994; Ehrenberg et al., 1998; Siegfried and Stock, 1999; Stock and Alston, 2000; Stock et al., 2000). Despite widespread interest in the job market, little is known about influences on starting salaries for new Ph.D. economists. Some salary information obtained by surveying department heads is disseminated each year at the traditional department chairs' breakfast at the Allied Social Science Association's meetings (Curington and Market, 1996) and through the American Economic Association's (AEA) Universal Academic Questionnaire (Scott and Siegfried, 1999, 2000). However, this information reports only aggregate trends in starting salaries, not an assessment of the effect of individual characteristics on starting salaries. Only two studies, both limited to academics, have examined starting salaries for individual economists. Formby et al. (1993) examined 1987-88 starting salaries for academic economists using survey data obtained from 258 U.S. economics departments. They found significantly higher starting salaries in higher cost-of-living areas, in Ph.D.-granting departments, and for individuals who began jobs after finishing their Ph.D., who work in public universities, who are in business schools, and who are in highly ranked departments. They found no significant demographic effects on starting salary, with the exception that age was a slight detriment in non-research-oriented departments. Ehrenberg et al. (1998) used AEA salary data to study the influence of tenure probabilities on starting salaries of economists. They found that departments with low tenure probabilities tend to pay higher starting salaries. They also found differences in starting salary based on benefit packages and cost-of-living differences and for individuals who began jobs after finishing their Ph.D. Recent work by Siegfried and Stock (1999) presents a broad overview of labor market outcomes using a large survey of economics Ph.D.s from the class of 1996-97. They document changes in market structure occurring over the past two decades, including a shift from academic to nonacademic positions, record numbers of new Ph.D.s entering the market, increasing proportions of foreign graduates, and a growing number of foreign-sector jobs. In addition, they present a general overview of factors influencing starting salaries, which reveals salary premiums for U.S. citizens, but no relationship between salary and other demographic attributes (age, sex, marital status, race). Those who took longer to earn their Ph.D. and those working in academia earned lower salaries. The purpose of this study is to explicitly identify and quantify determinants of starting salaries for new Ph.D. economists using the Siegfried and Stock survey data. We also identify factors associated with securing full-time permanent positions in economics, an important analysis because the percentage of new economics Ph. …