THE DOCTORATE IS IN

For years, business schools have been fretting over a looming faculty shortage. Not long ago, the American Association of Collegiate Schools of Business warned that the dearth of doctoral candidates could mean 2,400 unfilled B-school positions by 2012.

Will Wall Street's woes and a weak job market improve that outlook? Applications for business PhD programs are way up this year at top U.S. universities, as well as at global B-school INSEAD (table). "We were expecting some increase, but I don't think we had a good sense as to the magnitude of it," says Pradeep Chintagunta, who runs the doctoral program at the University of Chicago's Booth School of Business, where PhD applications rose 40%.

Administrators say the surge is mostly the result of undergraduates or newly minted MBAs trying to detour around the downturn, though those already in the workforce are also applying. (At the University of Pennsylvania's Wharton School, where PhD applications have jumped 34%, to 1,182, five applicants for the popular finance track are Lehman Brothers alumni.) Yuval Bar-Or, who teaches finance at Johns Hopkins University's Carey Business School, says some applicants may also be eyeing academia--the final destination of about two-thirds of business PhDs--to have a career that is "more respected in society" than business is these days.

There's no guarantee the rise in PhD applicants will yield a bumper crop of B-school professors. It's one thing to ride out a recession in grad school for a year or two, another to finish a program that lasts five years on average. And universities with crimped budgets can't absorb many more PhD students than the roughly 100 enrolled in the average program now. Typically these students get tuition waivers and stipends. The PhD candidates, meanwhile, can't bank on the predicted academic vacancies, says Chicago's Chintagunta. Current professors may put off retirement, he says, and growth in overall B-school enrollment could slacken. For now, he notes, "there seems to be a healthy demand for business education."