According to the Bureau of Labor Statistics, salaries for economics teachers, a category that includes professors, averaged nearly $140,000 a year -- based on a 52-week year -- in 2003, making it one of the highest-paid professions that the government tracks. But at the elite colleges, economics professors can earn substantially more, with some senior faculty commanding $150,000 to $250,000 for nine months' work. Other forms of compensation such as housing subsidies and signing bonuses can be used to bolster pay packages. Superstars, such as Nobel Prize winners, can earn in excess of $300,000.
...But while demand for academic economists has grown, supply hasn't. According to the National Science Foundation, U.S. universities churned out 1,051 Ph.D. economists in 2003, the last year for which figures are available. The number has held roughly steady for a decade.
It would seem to me that 1000 Ph.D's is plenty, relative to the number of openings. I wonder what would happen if an economics department chairperson decided to play "moneyball," trying to maximize some objective measure of quality of research within a tight budget constraint. My guess is that you would end up with faculty who are bit older and more narrowly specialized than the folks who are being heavily recruited.
For Discussion. What is the scarce resource that is causing the price of economics professors to rise?