The Role of Universities in Local Invention: Evidence from the Establishment of U.S. Colleges
110 Pages Posted: 20 Nov 2017
Date Written: November 13, 2017
I exploit historical natural experiments to study how establishing a new college affects local invention. Throughout the nineteenth to the mid-twentieth century, many new colleges were established in the U.S. I use data on the site selection decisions for a subset of these colleges to identify "losing finalist" locations that were strongly considered to become the site of a new college but were ultimately not chosen for reasons that are as good as random assignment. The losing finalists are similar to the winning college counties along observable dimensions. Using the losing finalists as counterfactuals, I find that the establishment of a new college caused 32% more patents per year in college counties relative to the losing finalists. To determine the channels by which colleges increase patenting, I use a novel dataset of college yearbooks and individual-level census data to learn who the additional patents in college counties come from. A college's alumni account for about 10% of the additional patents, while faculty account for less than 1%. Knowledge spillovers to individuals unaffiliated with the college also account for less than 1% of the additional patents. Migration is the most important channel by which colleges affect local invention, as controlling for county population accounts for 20-40% of the increase in patenting in college counties relative to the losing finalists. The presence of geographic spillovers suggests that colleges do cause an overall net increase in patenting, although I find no evidence that colleges are better at promoting invention than other policies that lead to similar increases in population.
Keywords: Innovation, Patents, Economic History, Education, Colleges
JEL Classification: I, N, O
Suggested Citation: Suggested Citation