The Color of Money: Federal vs. Industry Funding of University Research
September 2021
Working Paper Number:
CES-21-26
Abstract
U.S. universities, which are important producers of new knowledge, have experienced a shift in research funding away from federal and towards private industry sources. This paper compares the effects of federal and private university research funding, using data from 22 universities that include individual-level payments for everyone employed on all grants for each university year and that are linked to patent and Census data, including IRS W-2 records. We instrument for an individual's source of funding with government-wide R&D expenditure shocks within a narrow field of study. We find that a higher share of federal funding causes fewer but more general patents, more high-tech entrepreneurship, a higher likelihood of remaining employed in academia, and a lower likelihood of joining an incumbent firm. Increasing the private share of funding has opposite effects for most outcomes. It appears that private funding leads to greater appropriation of intellectual property by incumbent firms.
Document Tags and Keywords
Keywords
Keywords are automatically generated using KeyBERT, a powerful and innovative
keyword extraction tool that utilizes BERT embeddings to ensure high-quality and contextually relevant
keywords.
By analyzing the content of working papers, KeyBERT identifies terms and phrases that capture the essence of the
text, highlighting the most significant topics and trends. This approach not only enhances searchability but
provides connections that go beyond potentially domain-specific author-defined keywords.
:
investment,
researcher,
invention,
entrepreneur,
entrepreneurship,
innovation,
patent,
incentive,
subsidy,
patenting,
funding,
fund,
university,
institutional,
patented
Tags
Tags are automatically generated using a pretrained language model from spaCy, which excels at
several tasks, including entity tagging.
The model is able to label words and phrases by part-of-speech,
including "organizations." By filtering for frequent words and phrases labeled as "organizations", papers are
identified to contain references to specific institutions, datasets, and other organizations.
:
Internal Revenue Service,
National Science Foundation,
Ordinary Least Squares,
Department of Defense,
Columbia University,
Office of Management and Budget,
University of Maryland,
Longitudinal Business Database,
Department of Energy,
Michigan Institute for Teaching and Research in Economics,
Employer Identification Numbers,
Social Security,
Postal Service,
North American Industry Classification System,
Patent and Trademark Office,
Longitudinal Employer Household Dynamics,
Business Register,
Protected Identification Key,
Sloan Foundation,
National Center for Health Statistics,
Employer Characteristics File,
W-2,
Temporary Assistance for Needy Families,
National Institutes of Health,
Census Bureau Disclosure Review Board,
Disclosure Review Board
Similar Working Papers
Similarity between working papers are determined by an unsupervised neural
network model
know as Doc2Vec.
Doc2Vec is a model that represents entire documents as fixed-length vectors, allowing for the
capture of semantic meaning in a way that relates to the context of words within the document. The model learns to
associate a unique vector with each document while simultaneously learning word vectors, enabling tasks such as
document classification, clustering, and similarity detection by preserving the order and structure of words. The
document vectors are compared using cosine similarity/distance to determine the most similar working papers.
Papers identified with 🔥 are in the top 20% of similarity.
The 10 most similar working papers to the working paper 'The Color of Money: Federal vs. Industry Funding of University Research' are listed below in order of similarity.
-
Working PaperDo Cash Windfalls Affect Wages? Evidence from R&D Grants to Small Firms
February 2020
Working Paper Number:
CES-20-06
This paper examines how employee earnings at small firms respond to a cash flow shock in the form of a government R&D grant. We use ranking data on applicant firms, which we link to IRS W2 earnings and other U.S. Census Bureau datasets. In a regression discontinuity design, we find that the grant increases average earnings with a rent-sharing elasticity of 0.07 (0.21) at the employee (firm) level. The beneficiaries are incumbent employees who were present at the firm before the award. Among incumbent employees, the effect increases with worker tenure. The grant also leads to higher employment and revenue, but productivity growth cannot fully explain the immediate effect on earnings. Instead, the data and a grantee survey are consistent with a backloaded wage contract channel, in which employees of financially constrained firms initially accept relatively low wages and are paid more when cash is available.View Full Paper PDF
-
Working PaperResearch and/or Development? Financial Frictions and Innovation Investment
August 2023
Working Paper Number:
CES-23-39
U.S. firms have reduced their investment in scientific research ('R') compared to product development ('D'), raising questions about the returns to each type of investment, and about the reasons for this shift. We use Census data that disaggregates 'R' from 'D' to study how US firms adjust their innovation investments in response to an external increase in funding cost. Companies with greater demand for refinancing during the 2008 financial crisis, made larger cuts to R&D investment. This reduction in R&D is achieved almost entirely by reducing investment in research. Development remains essentially unchanged. If other firms patenting similar technologies must refinance, however, then Development investment declines. We interpret the latter result as evidence of technological competition: firms are reluctant to cut Development expenditures when that could place them at a disadvantage compared to potential rivals.View Full Paper PDF
-
Working PaperScientific Talent Leaks Out of Funding Gaps
February 2024
Working Paper Number:
CES-24-08
We study how delays in NIH grant funding affect the career outcomes of research personnel. Using comprehensive earnings and tax records linked to university transaction data along with a difference-in-differences design, we find that a funding interruption of more than 30 days has a substantial effect on job placements for personnel who work in labs with a single NIH R01 research grant, including a 3 percentage point (40%) increase in the probability of not working in the US. Incorporating information from the full 2020 Decennial Census and data on publications, we find that about half of those induced into nonemployment appear to permanently leave the US and are 90% less likely to publish in a given year, with even larger impacts for trainees (postdocs and graduate students). Among personnel who continue to work in the US, we find that interrupted personnel earn 20% less than their continuously-funded peers, with the largest declines concentrated among trainees and other non-faculty personnel (such as staff and undergraduates). Overall, funding delays account for about 5% of US nonemployment in our data, indicating that they have a meaningful effect on the scientific labor force at the national level.View Full Paper PDF
-
Working PaperWhere Have All the "Creative Talents" Gone? Employment Dynamics of US Inventors
April 2023
Working Paper Number:
CES-23-17
How are inventors allocated in the US economy and does that allocation affect innovative capacity? To answer these questions, we first build a model where an inventor with a new idea has the possibility to work for an entrant or incumbent firm. Strategic considerations encourage the incumbent to hire the inventor, offering higher wages, and then not implement her idea. We then combine data on 760 thousand U.S. inventors with the LEHD data. We find that when an inventor is hired by an incumbent, their earnings increases by 12.6 percent and their innovative output declines by 6 to 11 percent.View Full Paper PDF
-
Working PaperENFORCING COVENANTS NOT TO COMPETE: THE LIFE-CYCLE IMPACT ON NEW FIRMS
June 2014
Working Paper Number:
CES-14-27
We examine the impact of enforcing non-compete covenants (CNC) on the formation and performance of new firms using matched employer-employee data on 30 US states. To identify the impact of CNC, we exploit the inter-state variation in CNC enforcement along with the fact that courts do not enforce such covenants between law firms and departing lawyers in any state. Using a difference-in-difference-in-difference specification with law firms and firms that are not withinindustry spinouts as the baseline, we find states with stricter CNC enforcement have fewer, but larger within-industry spinouts that are more likely to survive their nascent years, and conditional on survival, grow faster during those years. These results are consistent with CNC enforcement having a selection effect on within-industry spinouts. Particularly, with stricter enforcement, only founders with higher-quality ideas and resources choose to overcome CNC-related barriers, which reduces entry rate but increases observed short-term performance of these spinouts.View Full Paper PDF
-
Working PaperWhat Happens When Firms Patent? New Evidence from U.S. Economic Census Data
January 2008
Working Paper Number:
CES-08-03
In this study, we present novel statistics on the patenting in US manufacturing and new evidence on the question of what happens when firms patent. We do so by creating a comprehensive firm-patent matched dataset that links the NBER patent data (covering the universe of patents) to firm data from the US Census Bureau (which covers the universe of all firms with paid employees). Our linked dataset covers more than 48,000 unique assignees (compared to about 4,100 assignees covered by the Compustat-NBER link), representing almost two-thirds of all non-individual, non-university, non-government assignees from 1975 to 1997. We use the data to present some basic but novel statistics on the role of patenting in US manufacturing, including strong evidence confirming the highly skewed nature of patenting activity. Next, we examine what happens when firms patent by looking at a large sample of first time patentees. We find that while there are significant cross-sectional differences in size and total factor productivity between patentee firms and non-patentee firms, changes in patentownership status within firms is associated with a contemporaneous and substantial increase in firm size, but little to no change in total factor productivity. This evidence suggests that patenting is associated with firm growth through new product innovations (firm scope) rather than through reduction in the cost of producing existing products (firm productivity). Consistent with this explanation, we find that when firms patent, there is a contemporaneous increase in the number of products that the firms produce. Estimates of (within-firm) elasticity of firm characteristics to patent stock confirm our results. Our findings are robust to alternative measures of size and productivity, and to various sample selection criteria.View Full Paper PDF
-
Working PaperThe EITC and Intergenerational Mobility
November 2020
Working Paper Number:
CES-20-35
We study how the largest federal tax-based policy intended to promote work and increase incomes among the poor'the Earned Income Tax Credit (EITC)'affects the socioeconomic standing of children who grew up in households affected by the policy. Using the universe of tax filer records for children linked to their parents, matched with demographic and household information from the decennial Census and American Community Survey data, we exploit exogenous differences by children's ages in the births and 'aging out' of siblings to assess the effect of EITC generosity on child outcomes. We focus on assessing mobility in the child income distribution, conditional on the parents' position in the parental income distribution. Our findings suggest significant and mostly positive effects of more generous EITC refunds on the next generation that vary substantially depending on the child's household type (single-mother or married family) and by the child's gender. All children except White children from single-mother households experience increases in cohort-specific income rank, own family income, and the probability of working at ages 25'26 in response to greater EITC generosity. Children from married households show a considerably stronger response on these measures than do children from single-mother households. Because of the concentration of family types within race groups, the more positive response among children from married households suggests the EITC might lead to higher within-generation racial income inequality. Finally, we examine how the impact of EITC generosity varies by the age at which children are exposed to higher benefits. These results suggest that children who first receive the more generous two-child treatment at later ages have a stronger positive response in terms of rank and family income than children exposed at younger ages.View Full Paper PDF
-
Working PaperThe Location of Industrial Innovation: Does Manufacturing Matter?
March 2013
Working Paper Number:
CES-13-09
What explains the location of industrial innovation? Economists have traditionally attempted to answer this question by studying firm-external knowledge spillovers. This paper shows that firm-internal linkages between production and R&D play an equally important role. I estimate an R&D location choice model that predicts patents by a firm in a location from R&D productivity and costs. Focusing on large R&D-performing firms in the chemical industry, an average-sized plant raises the firm's R&D productivity in the metropolitan area by about 2.5 times. The elasticity of R&D productivity with respect to the firm's production workers is almost as large as the elasticity with respect to total patents in the MSA, while proximity to academic R&D has no significant effect on R&D productivity in this sample. Other manufacturing industries exhibit similar results. My results cast doubt on the frequently-held view that a country can divest itself of manufacturing and specialize in innovation alone.View Full Paper PDF
-
Working PaperComparing Measures of Earnings Instability Based on Survey and Adminstrative Reports
August 2010
Working Paper Number:
CES-10-15
In Celik, Juhn, McCue, and Thompson (2009), we found that estimated levels of earnings instability based on data from the Current Population Survey (CPS) and the Survey of Income and Program Participation (SIPP) were reasonably close to each other and to others' estimates from the Panel Study of Income Dynamics (PSID), but estimates from unemployment insurance (UI) earnings were much larger. Given that the UI data are from administrative records which are often posited to be more accurate than survey reports, this raises concerns that measures based on survey data understate true earnings instability. To address this, we use links between survey samples from the SIPP and UI earnings records in the LEHD database to identify sources of differences in work history and earnings information. Substantial work has been done comparing earnings levels from administrative records to those collected in the SIPP and CPS, but our understanding of earnings instability would benefit from further examination of differences across sources in the properties of changes in earnings. We first compare characteristics of the overall and matched samples to address issues of selection in the matching process. We then compare earnings levels and jobs in the SIPP and LEHD data to identify differences between them. Finally we begin to examine how such differences affect estimates of earnings instability. Our preliminary findings suggest that differences in earnings changes for those in the lower tail of the earnings distribution account for much of the difference in instability estimates.View Full Paper PDF
-
Working PaperDoes Goliath Help David? Anchor Firms and Startup Clusters
May 2020
Working Paper Number:
CES-20-17
This paper investigates the effects of a large firm's geographical expansion (anchor firm) on local worker transitions into young firms through wage effects in industries economically proximate to the anchor firm. Using hand-collected data matched to administrative Census microdata, I exploit anchor firms' site selection processes to employ a difference-in-differences approach to compare workers in winning counties to those in counterfactual counties. The arrival of an anchor firm induces worker reallocation towards young firms in industries linked through input-output channels by a magnitude of 120 new businesses that account for approximately 2,300 jobs. Consistent with the literature in personnel and organizational economics, incumbent firms experiencing the fastest wage growth due to these shocks shed mid-layer employees who select into young firms within the county and in their own industry of experience. These effects are strongest in the most specialized and knowledge-intensive industries. Attracting an anchor firm to a county appears to have limited spillover effects in overall employment that are mainly driven by reorganization of incumbent firms in the anchor's input-output industries that face rising labor costs.View Full Paper PDF
