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

84 Pages Posted: 17 Apr 2020 Last revised: 23 Nov 2020

See all articles by Tania Babina

Tania Babina

Columbia Business School - Finance and Economics

Alex Xi He

University of Maryland - Robert H. Smith School of Business

Sabrina T Howell

New York University (NYU) - Leonard N. Stern School of Business; National Bureau of Economic Research (NBER)

Elisabeth Perlman

U.S. Census Bureau

Joseph Staudt

U.S. Census Bureau

Multiple version iconThere are 2 versions of this paper

Date Written: November 23, 2020

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.

Keywords: R&D, Science, Universities, Innovation, Entrepreneurship

JEL Classification: O3, G18, G38, I2

Suggested Citation

Babina, Tania and He, Alex Xi and Howell, Sabrina T and Perlman, Elisabeth and Staudt, Joseph, The Color of Money: Federal vs. Industry Funding of University Research (November 23, 2020). Available at SSRN: https://ssrn.com/abstract=3560195 or http://dx.doi.org/10.2139/ssrn.3560195

Tania Babina

Columbia Business School - Finance and Economics ( email )

3022 Broadway
New York, NY 10027
United States

Alex Xi He (Contact Author)

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742-1815
United States

HOME PAGE: http://www.alexxihe.com/

Sabrina T Howell

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States
212-998-0913 (Phone)

HOME PAGE: http://www.sabrina-howell.com

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Elisabeth Perlman

U.S. Census Bureau ( email )

4600 Silver Hill Road
D.C., WA 20233
United States

Joseph Staudt

U.S. Census Bureau ( email )

4600 Silver Hill Road
D.C., WA 20233
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
371
Abstract Views
1,956
rank
101,181
PlumX Metrics