Gender differences in faculty pay and faculty salary compression

A recording distinction between cost-of-living and merit adjustments at a unionized, public liberal arts college allows us to examine several issues related to gender differences in faculty pay. For example, we find that annual fixed-dollar merit increases and similar starting salaries contribute to comparable salary growth rates for female and male faculty. In this setting, the male faculty earnings advantage is traced to higher rank and years of service. These results underscore the importance of gender-neutral salary-setting practices and equal access to promotion and retention for female faculty. The salary distinctions also allow us to determine the source of the seniority penalty. The economics literature is divided on whether the often-observed lower pay of senior faculty is deserved. We find that merit pay rises with additional years of seniority and that the seniority penalty is rooted in cost-of-living adjustments that fail to keep pace with market trends. These findings illustrate how the seniority penalty can be linked to budget considerations rather than the lower productivity of senior staff.