Professors Respond to Incentives; and so do students :: The EclectEcon

Whichever way it happens, this result warms the cockles of my economist's heart:

The C.D. Howe Institute recently published a study that shows professors are more productive at universities that have merit-based salaries. Also, students at those universities seem to perform better.
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[or, alternatively,] What if good professors and good students tend to select schools that have merit pay for their professors? Then the existence of merit pay would have an incentive effect quite different from "merit pay encourages professors to do a better job."