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Why Does the United States Have the Best Research Universities? Incentives, Resources, and Virtuous Circles

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  • W. Bentley MacLeod
  • Miguel Urquiola

Abstract

Around 1875, the US had none of the world’s leading research universities; today, it accounts for the majority of the top-ranked. Many observers cite events surrounding World War II as the source of this reversal. We present evidence that US research universities had surpassed most countries’ decades before World War II. An explanation of their dominance must therefore begin earlier. The one we offer highlights reforms that began after the Civil War and enhanced the incentives and resources the system directs at research. Our story is not one of success by design, but rather of competition leading American colleges to begin to care about research. We draw on agency theory to argue that this led to increasing academic specialization, and in turn, to more precise measures of professors’ research output. Combined with sorting dynamics that concentrated talent and resources at some schools—and the emergence of tenure—this enhanced research performance.

Suggested Citation

  • W. Bentley MacLeod & Miguel Urquiola, 2021. "Why Does the United States Have the Best Research Universities? Incentives, Resources, and Virtuous Circles," Journal of Economic Perspectives, American Economic Association, vol. 35(1), pages 185-206, Winter.
    • Handle: RePEc:aea:jecper:v:35:y:2021:i:1:p:185-206
    DOI: 10.1257/jep.35.1.185
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    Cited by:

    1. Erina Ytsma, 2022. "Effort and Selection Effects of Performance Pay in Knowledge Creation," CESifo Working Paper Series 10153, CESifo.
    2. Marchiori, Carmen & Minelli, Enrico, 2023. "Talent, basic research and growth," Journal of Economic Theory, Elsevier, vol. 213(C).
    3. Cao, Yihui & Sickles, Robin C. & Triebs, Thomas P. & Tumlinson, Justin, 2024. "Linguistic distance to English impedes research performance," Research Policy, Elsevier, vol. 53(4).
    4. Oleg V. Pavlov & Evangelos Katsamakas, 2024. "Tuition too high? Blame competition," Papers 2405.17762, arXiv.org.
    5. Aloys Prinz & Thomas Ehrmann, 2022. "Academia as a league system," Journal of Business Economics, Springer, vol. 92(7), pages 1065-1092, September.
    6. Pavlov, Oleg V. & Katsamakas, Evangelos, 2023. "Tuition too high? Blame competition," Journal of Economic Behavior & Organization, Elsevier, vol. 213(C), pages 409-431.
    7. Chiara Zanardello, 2023. "Market forces in Italian academia today (and yesterday)," Scientometrics, Springer;Akadémiai Kiadó, vol. 128(1), pages 651-698, January.

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    More about this item

    JEL classification:

    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • N31 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - U.S.; Canada: Pre-1913
    • N32 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - U.S.; Canada: 1913-

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