New Study Looks at Effect of Federally Funded Research on the Economy

December 11, 2015

Does funding for federal research ever end up benefiting the overall economy, and do Ph.D.s really help graduates land lucrative positions outside academe? An article out today in Science suggests there are positive links between funding for academic research and economic growth. More specifically, nearly 40 percent of new Ph.D.s graduating from a group of major Midwest research institutions took jobs in industry, many in high-wage businesses.

Julia Lane, a fellow at the American Institutes for Research, served as lead authors of the article, which makes use of U.S. Census Bureau data and institutional information regarding 3,197 graduate students who worked on federal and nonfederal research grants at the eight sample universities. Of particular interest to the researchers were the Ph.D.s’ earnings and placement outcomes from about 2009 to 2012. “While the links we found are not causal, this work is a first step toward describing the connection between research funding and the economy,” Lane said in a statement. “And the results are extremely interesting. Doctoral recipients who go into industry earn considerably more and end up in larger establishments with higher payrolls per worker.”

Among the paper’s major findings are that most graduate students (57 percent) went into academe, but a significant proportion -- 39 percent -- found jobs in industry. Some 17 percent worked in establishments that perform research and development, compared to 11 percent of the population over all. One in five doctoral recipients stayed in the state where they’d studied, and about 13 percent stayed within 50 miles of their university. The share of Ph.D. recipients employed in pharmaceutical and medicine manufacturing, semiconductors and computer systems design was four to 19 times the national average.

The median employer of doctoral recipients studied had much higher payroll per worker on average than the national median establishment, at $90,000 versus $33,000 annually, respectively. And while just 8 percent of the U.S. workforce and 24 percent of workers at establishments owned by firms conducting research and development had payrolls over $100,000 per worker, half of the sample Ph.D.s did.

Lane said that in the future, “the integration of the data with census information will permit even richer analyses, such as the propensity of researchers to start up businesses.”

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