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

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Listed:
  • Tania Babina
  • Alex Xi He
  • Sabrina T. Howell
  • Elisabeth Ruth Perlman
  • Joseph Staudt

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.

Suggested Citation

  • Tania Babina & Alex Xi He & Sabrina T. Howell & Elisabeth Ruth Perlman & Joseph Staudt, 2021. "The Color of Money: Federal vs. Industry Funding of University Research," Working Papers 21-26, Center for Economic Studies, U.S. Census Bureau.
    • Handle: RePEc:cen:wpaper:21-26
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    Cited by:

    1. Margaret E. Blume-Kohout, 2023. "The case of the interrupting funder: dynamic effects of R&D funding and patenting in U.S. universities," The Journal of Technology Transfer, Springer, vol. 48(4), pages 1221-1242, August.

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    More about this item

    Keywords

    R&D; Science; Universities; Innovation; Entrepreneurship;
    All these keywords.

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • I2 - Health, Education, and Welfare - - Education

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