Working Paper: NBER ID: w15146
Authors: Margaret E. Blumekohout; Krishna B. Kumar; Neeraj Sood
Abstract: This paper investigates the impact of federal extramural research funding on total expenditures for life sciences research and development (R&D) at U.S. universities, to determine whether federal R&D funding spurs funding from non-federal (private and state/local government) sources. We use a fixed effects instrumental variable approach to estimate the causal effect of federal funding on non-federal funding. Our results indicate that a dollar increase in federal funding leads to a $0.33 increase in non-federal funding at U.S. universities. Our evidence also suggests that successful applications for federal funding may be interpreted by non-federal funders as a signal of recipient quality: for example, non-PhD-granting universities, lower ranked universities and those that have historically received less funding experience greater increases in non-federal funding per federal dollar received.
Keywords: federal funding; life sciences; university R&D; instrumental variables
JEL Codes: H5; I1; I2; O3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Federal funding (I22) | Nonfederal funding (H77) |
| Lagged federal funding (H77) | Nonfederal funding (H77) |
| Successful federal funding applications (I23) | Nonfederal funding (H77) |
| Federal funding (I22) | University quality (signal) (C29) |