INOMICS has been offering students and professionals a comprehensive online resource for their academic and career choices since 1998. Amongst the services it provides is an Annual Salary Report. The 2016 Report was published just after our January issue went to press. Here is a summary of its main findings. Full details of the survey and of INOMICS’ other activities can be found at their website, https://inomics.com/ISR2016
The results of this report were compiled from information collected by an online questionnaire between August and October 2016. In addition, the questionnaire was circulated through social media channels and by email.
In all, 1,959 respondents from 99 countries took part in the survey, more than twice the number that contributed to the 2015 report. All were currently in employment, most of them in universities and representing different career stages from PhD student to full professor. Compared to the 2015 Salary Report, the 2016 edition includes more data from the private sector in order to construct salary comparisons between the private sector and academia. The 2016 questionnaire also asked additional questions such as salary satisfaction level, main motivations at work and skills/experiences justifying higher salaries.
The age distribution of the respondents is shown in table 1. It also shows the wide geographical dispersion of respondents across the world, making regional salary comparisons feasible. The survey does not, however, take into account living costs which will differ substantially between regions. 75 per cent of respondents were male.
Participants were asked to indicate their type of employer. Results (Table 2) show that a large majority, 73 per cent, work for a university.
When it comes to qualification by discipline, 85 per cent of respondents had an Economics background with eight per cent coming from Accounting and Finance. The remainder were spread across Business Administration, Management, Marketing and Statistics in roughly equal numbers. Two per cent had a bachelor’s degree; 12 per cent had a master’s and 85 per cent had a PhD or higher qualification.
– by highest academic degree
Figure 1 shows a positive correlation between level of qualification and salary. While this might be expected, it’s striking that the return to a PhD over a Master’s is more than double while the benefit from a Master’s is only 35 per cent greater than a Bachelor’s degree.
– by academia v private sector
As Figure 2 shows, average salary in the private sector is higher than that in academia. The exception is the UK. The gap between academia and the private sector is largest in Western Europe, where people employed in academia receive on average 25 per cent lower average salary compared to the private sector. North America and Germany appear to have a smaller salary disparity between academia and the private sector. North America has the highest average salary for both sectors across all countries/continents and Asia has the lowest average salary among the regions included in the report.
Table 4 compares salaries in both academia and the private sector, across a range of positions and continents. Unsurprisingly, salaries are generally highest in the USA, followed by Western Europe and Asia. Salaries in the UK lie about midway between the US and W European averages.
Within each continent (and the UK) full professors and senior appointments in the private sector enjoy broadly equal compensation. However, when it comes to middle-level appointments, the private sector offers better rewards than academia.
On average, someone working as a researcher/analyst is better financially compensated in the private sector than in academia. The difference is larger in mid/senior level than junior level.
– by years of experience
In a departure from previous years, the latest Inomics Salary Report contains data on the relationship between salary and length of experience (Report, p.16). As might be expected, this shows a positive correlation between salary and years of experience (using worldwide averages). This is especially clear for those working in academia. Two points of interest emerge, however. The first is that there is a large jump in academic salaries for those with the longest service (beyond 20 years). The second is that while the positive correlation holds for both sectors, progression for economists working in the private sector is very slow in the first few years. It appears to take at least three years’ experience before private sector economists can expect a significant improvement in salary.
We have reported many time in this Newsletter on gender-related differences in the economics profession (often based on research by the Society’s own Committee on Women in the Economics Profession). Furthermore, we know from reader reactions that it’s an issue of some importance.
For this reason, we reproduce the following figure from the Inomics 2016 Salary Report which shows average salary across a range of positions, countries and continents, by gender.
The virtually universal presence of a gender gap favouring male employees is immediately obvious. The only exceptions are full professors in the USA and women at the senior level in the UK’s private sector. Elsewhere, the traditional gender pay gap appears to be the norm, though there are substantial variations in its size between geographic areas and positions. Leaving aside senior academics, women in Italy appear to experience a large proportionate disadvantage.
Another departure from earlier surveys were the questions put to respondents regarding motivation. In both academia and the private sector, personal satisfaction was the most important motivation. For respondents in academia ‘academic interest’ ran this a close second while the impact their work had on society featured as the second highest motivation for economists in the private sector.
Within academia these reults were remarkably consistent across countries/continents, though ‘financial motivation’, which came in sixth place out of nine listed motivations, was particularly low for economists in Germany and Italy.
For economists in the private sector there was rather more dispersion of results across continents/countries, and ‘financial motivation’ scored more highly, for most economists ranking about fourth out of nine.
Respondents were also asked to rank their satisfaction with salary on a scale from 1 (very dissatisfied) to 5 (very satisfied). Amongst academics, satisfaction varied positively with salary level though it is worth noting that even at the top, full professors gave a score of only 3.5 on average. In Germany, however, the score was 4.2. Italian academics were generally less satisfied than others. A broadly similar pattern emerged in the private sector with higher salaries conferring higher satisfaction. Interestingly perhaps it was entrepreneurs who returned the highest score, of 3.7.