Universities Bolster Local Economies (But No More Than Companies Do)

September 1, 2009

Research universities produce economic activity that spills over to their local communities -- but to no greater extent than the "spillover" effect that other types of local economic activity produce, according to a study published by the National Bureau of Economic Research. The study, a summary of which can be found here (along with information about purchasing it), was published by two researchers at the University of California at Merced; it finds that a "10 percent increase in higher education spending increases local non-education sector labor income by about 0.5 percent," about the same as the "agglomeration spillovers arising from local economic activity in general," suggesting that "university activity does not appear to make a place any more productive than other forms of economic activity.... We do find, however, that the magnitude of the spillover is significantly larger for firms that are technologically closer to universities in terms of citing patents generated by universities in their own patents and sharing a labor market with higher education," the authors write.

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