CREAT: Census Research Exploration and Analysis Tool

Estimating the Local Productivity Spillovers from Science

January 2017

Working Paper Number:

CES-17-56

Abstract

We estimate the local productivity spillovers from science by relating wages and real estate prices across metros to measures of scienti c activity in those metros. We address three fundamental challenges: (1) factor input adjustments using wages and real estate prices, along with Shepards Lemma, to estimate changes metros' productivity, which must equal changes in unit production cost; (2) unobserved differences in metros/causality using a share shift index that exploits historic variation in the mix of research in metros interacted with trends in federal funding for specific fields as an instrument; (3) unobserved differences in workers using data on the states in which people are born. Our estimates show a strong positive relationship between wages and scientifc research and a weak positive relationship for real estate prices. Overall, we estimate high rate of return to research.

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:
investment, market, endogeneity, estimating, earnings, employ, expenditure, metropolitan, impact, economically, spillover, workforce, gdp, housing, residential

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:
Bureau of Labor Statistics, National Science Foundation, Ordinary Least Squares, National Bureau of Economic Research, Bureau of Economic Analysis, National Income and Product Accounts, Federal Reserve Bank, Retail Trade, 1940 Census, Wholesale Trade, American Community Survey, Public Administration, Ohio State University, Integrated Public Use Microdata Series, Agriculture, Forestry

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