Modeling NABE Members Compensation

NABE has been regularly conducting a salary survey of its members for more than 20 years. More sophisticated statistical analysis of the salary survey, however, has been performed infrequently. The regression equation for NABE members’ total compensation reported here and implemented on the NABE website provides a tool to estimate compensation as a function of the characteristics measured in the NABE Salary Survey. The significant explanatory variables, functional form, and goodness of fit are consistent with both earlier research on NABE members’ compensation and the more general literature. Since there are many characteristics that influence compensation that are not measured in the NABE Salary Survey —such as work effort, communications and other job-related skills, and good luck —the equation’s results should not be viewed as a precise estimate of what any one person “should” be paid. But if compensation is closely related to marginal value product, then the regression results provide an indication of what characteristics make NABE members valuable to their employers. JEL Classification M210, J310