Recessions in Higher Education: A Study of Faculty Sensitivities to Changes in Funding Vis-à-vis Periods of Recession
This paper analyzes the degree to which faculty at public universities are further impacted by the financial difficulties brought about by recessions than their private counterpart and how that trend has changed over time. Contracting state budgets for public universities and dips in endowment revenue for private universities compel these institutions to cut back on large-scale spending, such as faculty, or garner the missing revenue from other sources, such as raising the cost of tuition. We consider the number of faculty and their respective salaries as our outcomes of interest. We hypothesized that public universities would fare worse during economic downturns than private universities primarily due to specific vulnerabilities in their funding relative to private universities. Using university-level fixed effects, we consider university faculty dis-aggregated by rank, sex, and salary. This study contributes to some existing literature on recessions and their relationship to universities specifically by addressing the aspects relating to faculty counts and earnings, and covering more recessions. It considers historical data from 1983 to 2014, capturing the four previous recessions. We find that while in some instances, faculty at public higher education institutions are more vulnerable to the adverse effects of a recession, it is not always the case.