Adam Smith's discussion of the payment modes of teachers and resulting consequences for the quality of teaching and process of curricular innovation are reviewed through the conceptual lens of modern agency theory. Smith's analysis of higher education in his day (eighteenth century) sheds light on faculty incentive and assessment problems that…

Recent data about faculty salaries, promotion, tenure rates, and merit pay are examined to shed new light on the broad influence of unionism in U.S. faculty compensation patterns. A major question posed is whether or not incidence of merit pay declines with the spread of unionism. (MSE)