Multitask Agents and Incentives : The Case of Teaching and Research for University Professors

This paper evaluates the behavioural responses of multitask agents to the provision of incentives skewed towards one task only. It studies the effects of significant research incentives for university professors on the way university faculty members allocate their efforts between teaching and research and on the way they select different types of universities. I first obtain different individual-level measures of teaching and research performance. Then, I estimate a difference in differences model, exploiting a natural experiment that took place at Bocconi University, which significantly strengthened incentives towards research. I find evidence that teaching and research efforts are substitute inputs in the professors' cost function: the impact of research incentives is positive on research activity and negative on teaching performance. The effects are driven by career concerns rather than by monetary incentives. Moreover, under the new incentive regime, lower ability researchers tend to leave universities and since teaching and research ability are positively correlated, this implies that bad teachers also tend to leave universities