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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 ()

No 28160, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: U.S. universities have experienced a shift in research funding away from federal and towards private industry sources. This paper evaluates whether the source of funding – federal or private industry – is relevant for commercialization of research outputs. We link person-level grant data from 22 universities to patent and career outcomes (including IRS W-2 records). To identify a causal effect, we exploit individual-level variation in exposure to narrow federal R&D programs stemming from pre-existing field specialization. We instrument for the researcher’s funding sources with aggregate supply shocks to federal funding within these narrow fields. The results show that a higher share of federal funding reduces patenting and the chances of joining an incumbent firm, while increasing the chances of high- tech entrepreneurship and of remaining employed in academia. A decline in the federal share of funding is offset by an increase in the private share of funding, which has opposite effects. We conclude that the incentives of private funders to appropriate research outputs have important implications for the trajectory of university researcher careers and intellectual property.

JEL-codes: G18 G38 I2 O3 (search for similar items in EconPapers)
Date: 2020-12
New Economics Papers: this item is included in nep-ent and nep-ino
Note: CF ED PR
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