The Local Economic Impact of Science Spending: Evidence from the American Recovery and Reinvestment Act

53 Pages Posted: 22 Jun 2018 Last revised: 30 Apr 2019

See all articles by Yulia Chhabra

Yulia Chhabra

University of Michigan at Ann Arbor

Margaret C. Levenstein

University of Michigan at Ann Arbor - Survey Research Center; The Stephen M. Ross School of Business at the University of Michigan, Business Economics and Public Policy

Jason Owen-Smith

University of Michigan at Ann Arbor

Date Written: April 2019

Abstract

We use detailed information about American Recovery and Reinvestment Act (ARRA) spending to identify the distinctive effects R&D stimulus had on county level employment dynamics. ARRA R&D and science funding was awarded to over half the counties in the country. Counties with research universities and existing manufacturing employment were more likely to receive funding. We estimate that, over the program’s five-year disbursement period, each one million USD in R&D and science spending was associated with twenty-seven additional jobs in the county that received the stimulus and one additional job in adjacent counties. The average cost of a job for a year was less than $15,000.

Keywords: federal spending, fiscal multiplier, R&D, science, research, the American Recovery and Reinvestment Act

JEL Classification: E62, E65, O38

Suggested Citation

Chhabra, Yulia and Levenstein, Margaret C. and Owen-Smith, Jason, The Local Economic Impact of Science Spending: Evidence from the American Recovery and Reinvestment Act (April 2019). Ross School of Business Paper No. 1383, Available at SSRN: https://ssrn.com/abstract=3201136 or http://dx.doi.org/10.2139/ssrn.3201136

Yulia Chhabra (Contact Author)

University of Michigan at Ann Arbor ( email )

701 Tappan Street
Ann Arbor, MI 48109
United States

Margaret C. Levenstein

University of Michigan at Ann Arbor - Survey Research Center ( email )

500 S. State Street
Ann Arbor, MI 48109
United States
734-615-9088 (Phone)
734-647-1186 (Fax)

HOME PAGE: http://www-personal.umich.edu/~maggiel

The Stephen M. Ross School of Business at the University of Michigan, Business Economics and Public Policy

Ann Arbor, MI 48109
United States
734-764-8336 (Phone)

Jason Owen-Smith

University of Michigan at Ann Arbor ( email )

Ann Arbor, MI
United States

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