The U.S. has long enjoyed a preeminent position in the world of science. The nation does more research, publishes more articles that are cited by more scientists and wins more Nobel Prizes than any other. It has also long been the chief destination for scientists and engineers from other countries—many U.S. Nobel laureates are foreign-born.

What explains the strong productivity of the U.S. workforce, and what makes the U.S. so attractive to the foreign-born and foreign-educated? A big part of the answer is resources: the U.S. has a strong history of supporting research at universities—the country devotes more than 0.3 percent of its GDP to it every year. A study of academic careers by country found that faculty members in the U.S. earn higher salaries than anywhere in Europe, save perhaps Ireland (before the 2008 crash). Full professors in France or Germany earn about €4,500 a month, 55 percent of what their U.S. counterparts earn. Although the job market for Ph.D.'s has been tight recently, there is no reason to think that the U.S. is still not ahead on pay level.

But high pay is only part of what puts the U.S. out in front. Unequal pay among researchers contributes significantly to a nation's success in attracting the best and the brightest. Universities in the U.S. have greater leeway than those in most other places to reward performance and to pay high salaries to attract star researchers.

Pay inequality is not the norm abroad. Many countries tie salary to rank and years of experience, which means that everyone with the same amount of experience at the same rank earns precisely the same amount. The only reward for those who are more productive is the possibility of being promoted more quickly or, in some countries, being allocated more resources for research. Even promotion, however, can be accompanied by a negligible increase in salary. In Norway, for example, a full professor earns at best about 30 percent more than someone who is just starting his or her career. In the U.S., a full professor earns, on average, 60 to 80 percent more than someone just starting out, but exceptionally productive full professors earn four to five times more than what a new hire makes. Japan follows a model that is closer to that of the U.S. than that of Europe in terms of relative pay, rewarding full professors at close to twice the compensation of entry-level faculty.

In Europe, a scientist is less apt to move from one job to another once he or she is hired by a university. There is little incentive to move. Faculty in most of Europe are civil servants and receive the same salary regardless of where they work. Salary plays no role in recruiting faculty from one institution to another within a country.

In the U.S., in contrast, substantial variation exists in three key dimensions of salary across universities: starting salary, salary paid within rank, and salary differentials across rank. For example, the starting average salary for faculty in computer and information sciences in 2008 at public institutions was just shy of $85,000. The highest starting salary reported that year was slightly more than $125,000. Among associate professors, the spread was even greater: mean salary was $100,000, and the highest was almost twice that ($193,000). For full professors—the top academic rank—the mean was $133,000, and the highest was $301,000.

Productivity is a major factor contributing to the pay differentials. Most U.S. universities take into account research productivity, measured by the quality of papers published, in considering salary raises and promotions. Yet productive scientists are also often recruited away to higher-paying institutions—which tend to be private. Indeed, in 2010 only one public institution (the University of California, Los Angeles) paid a top-20 salary—and that was $43,000 less than high-paying Harvard University. Private institutions not only pay more; they generally can provide better facilities and attract better students for faculty members to work with.

One way to measure salary differentials among persons of the same rank is to compute the “Gini” coefficient. In countries where everyone gets the same salary at the same rank for comparable years of experience, the Gini coefficient within rank is 0. The most extreme pay differential would be a Gini coefficient of 1—if, say, all faculty members except one were to earn nothing. No pay scale is so extreme, of course, but the Gini coefficient is nowhere near 0 for faculty in the U.S. For assistant professors in engineering, the Gini coefficient is 0.164; for full professors, it is 0.22, indicating considerable inequality in salaries earned among those faculty holding the same rank, as well as increasing inequality as one moves from lower ranks to upper ranks. Given the statistics on salary and the considerable spread in salary among teachers of the same rank, it is a pretty safe bet that high salaries and a system that rewards productivity play an important role in the U.S.'s science ranking.

Pay alone is not enough. If it were, King Abdullah University of Science and Technology (KAUST) in Saudi Arabia would probably be near the uppermost tier of any global ranking of universities. A 2008 study of faculty pay in 15 representative countries, including the U.K., Germany, the U.S., Japan and China, found that Saudi Arabian senior faculty make the highest salaries, adjusted for cost of living. Yet KAUST is nowhere near the top in research rankings.

The U.S. has long been known for excellent academic institutions that produce strong science. Having the resources to hire and reward highly productive faculty has been key to this success. In recent years, however, pay inequality in the U.S. has increased significantly. Many public institutions have been receiving fewer resources from their states. At the same time, endowments of private institutions such as Harvard and Yale have grown considerably, allowing them to hire aggressively. Whether growing pay inequality is constructive for U.S. universities is a matter of debate.

Scientists care about more than just money. They also value independence and the challenge of doing science. But resources are essential to giving the top scientists free rein to pursue their passions. When it comes to producing the best science possible, it pays to foster a society of elites.