This paper examines the disincentive effects of perceived underpayment on individuals’
exerted effort and promotion. To this end we develop a theoretical framework and obtain
empirical evidence by analysing British academia data. We find that, tenured academics will
tend to invest less effort in publishing as the difference between their perceived deserved
income and actual income increases. On the other hand, for non-tenured academics this
relationship is ambiguous. Our model predicts that if, however, tenured staff also derive
utility directly from publication, over and above that associated with income and promotion,
the difference between perceived and actual income has a smaller negative effect on the
actual effort invested in research.