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The Color of Money: Federal vs. Industry Funding of University Research

Tania Babina, Alex Xi He, Sabrina T. Howell, Elisabeth Perlman and Joseph Staudt

Working Papers from U.S. Census Bureau, Center for Economic Studies

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.

Keywords: R&D; Science; Universities; Innovation; Entrepreneurship (search for similar items in EconPapers)
JEL-codes: G18 G38 I2 O3 (search for similar items in EconPapers)
Pages: 63 pages
Date: 2021-09
New Economics Papers: this item is included in nep-ent, nep-ino, nep-isf and nep-sbm
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https://www2.census.gov/ces/wp/2021/CES-WP-21-26.pdf First version, 2021 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:21-26

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