Using agent-based simulation to examine the robustness of up-or-out promotion systems in universities

One of the dominant features of the American higher education system is the use of up-or-out promotion for junior faculty followed by life-long tenure. For organizational economists, the widespread use of up-or-out promotion over a long period of time represents prima facie evidence of its efficiency. What is well less known is the robustness of the system to various changes in labor patterns. The following paper uses an agent-based simulation to examine the robustness of an up-or-out system to contingencies such as heightened turnover, undersupply and oversupply of tenure-track candidates, and retirement policies. In each case a comparison is made with alternative promotion systems, such as seniority and merit based promotion. It is concluded that up-or-out promotion is not optimal in all cases.