University Innovation and Local Economic Growth

60 Pages Posted: 22 Mar 2021

See all articles by Naomi Hausman

Naomi Hausman

Hebrew University of Jerusalem - Department of Economics

Date Written: May 1, 2020


This paper identifies the extent to which knowledge from U.S. universities drives industry agglomeration. Establishment-level data indicate faster growth in employment, wages, and corporate innovation after the Bayh-Dole Act’s shock to the spread of innovation from universities in industries more closely related to the nearby university’s innovative strengths. Federal research funding amplified the effect. University knowledge spillovers strengthen with geographic proximity, density, and local skills. Consistent with spatial equilibrium models, the growth effect is driven by nearby entry in university-linked industries, especially of multi-unit expansions; these firms disproportionately partner with universities in R&D, transfer IP, and innovate.

Keywords: universities, innovation, agglomeration, knowledge spillovers, local growth, local development

JEL Classification: R11,R12,O30

Suggested Citation

Hausman, Naomi, University Innovation and Local Economic Growth (May 1, 2020). Review of Economics and Statistics, Forthcoming, Available at SSRN: or

Naomi Hausman (Contact Author)

Hebrew University of Jerusalem - Department of Economics ( email )


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