Working Paper: CEPR ID: DP5700
Authors: E. Han Kim; Adair Morse; Luigi Zingales
Abstract: We study the location-specific component in research productivity of economics and finance faculty who have ever been affiliated with the top 25 universities in the last three decades. We find that there was a positive effect of being affiliated with an elite university in the 1970s; this effect weakened in the 1980s and disappeared in the 1990s. We decompose this university fixed effect and find that its decline is due to the reduced importance of physical access to productive research colleagues. We also find that salaries increased the most where the estimated externality dropped the most, consistent with the hypothesis that the de-localization of this externality makes it more difficult for universities to appropriate any rent. Our results shed some light on the potential effects of the internet revolution on knowledge-based industries.
Keywords: faculty productivity; firm boundaries; knowledge-based industries; theory of the firm
JEL Codes: D85; I23; J24; J31; J62; L23; L31; O33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| advancements in communication technology (L96) | reduced importance of physical access to productive research colleagues (O36) |
| delocalization of research externalities (O36) | decline in average salary increases at institutions (J31) |
| other universities catching up in faculty quality (D29) | decline in university fixed effects (D29) |
| advancements in information technology alone (O30) | decline in university fixed effects (D29) |
| university affiliation (I23) | faculty productivity (D29) |
| moving from non-top 25 university to Harvard (I23) | faculty productivity (D29) |
| decline of positive effect of affiliation with elite university over time (D29) | faculty productivity (D29) |