Performance-related pay causes the best academics to cluster together, evidence from Germany suggests. Paying academics bonuses for their research encourages them to join more productive colleagues, thereby concentrating scholarly talent and boosting output, according to a study of German universities.
The study used data from Germany, where from 2005 a change in the law proclaimed that all new academics would be eligible for performance-related bonuses on top of a basic wage. Under the new system, known as “W-pay”, bonuses are paid for research performance and winning research funds, as well as for taking on management duties, or for attracting and retaining academics.
Universities have discretion over how they award bonuses, which can be worth more than €5,000 (Rs.3.73 lakh) per month.
After the reforms, the top performing researchers, as measured by publication rates, clustered together more than they had previously, according to the study Lone Stars or Constellations? The Impact of Performance Pay on Matching Assortativeness in Academia. High-quality departments hired far more productive researchers than their lower performing counterparts. They also got rid of poorer performing academics, while lower quality departments lost more productive scholars. In other words, the best scholars seek out similarly talented colleagues to work with in order to boost their productivity, just as highly educated or wealthy people look for mates with similar traits.
Concentrating workers into high-productivity and low-productivity clusters results in higher production overall than when groups contain a mixture of talents, the paper argues. “A greater total scientific output may boost technological progress. So to the extent that there are positive productivity spillovers in academia, this calls for a concentration of the most productive academics,” the paper concludes, although it warns that this may come at the cost of providing “good scientific education to many people, all over a country”.