The Growing Allocative Inefficiency of the U.S. Higher Education Sector
AbstractThis paper presents new evidence on research and teaching productivity in universities using a panel of 102 top U.S. schools during 1981-1999. Faculty employment grows at 0.6 percent per year, compared with growth of 4.9 percent in industrial researchers. Productivity growth per researcher is 1.4-6.7 percent and is higher in private universities. Productivity growth per teacher is 0.8-1.1 percent and is higher in public universities. Growth in research productivity within universities exceeds overall growth, because the research share grows in universities where productivity growth is less. This finding suggests that allocative efficiency of U.S. higher education declined during the late 20th century. R&D stock, endowment, and post-docs increase research productivity in universities, the effect of nonfederal R&D is less, and the returns to research are diminishing. Since the nonfederal R&D share grows and is higher in public schools, this may explain the rising inefficiency. Decreasing returns in research but not teaching suggest that most differences in university size are due to teaching.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 12683.
Date of creation: Nov 2006
Date of revision:
Publication status: published as Freeman, Richard B. and Daniel Goroff (eds.) Science and Engineering Careers in the U.S. Chicago: University of Chicago Press for NBER, 2009.
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Other versions of this item:
- James D. Adams & J. Roger Clemmons, 2009. "The Growing Allocative Inefficiency of the U.S. Higher Education Sector," NBER Chapters, in: Science and Engineering Careers in the United States: An Analysis of Markets and Employment, pages 349-382 National Bureau of Economic Research, Inc.
- James D. Adams & J. Roger Clemmons, 2006. "The Growing Allocative Inefficiency of the U.S. Higher Education Sector," Rensselaer Working Papers in Economics 0611, Rensselaer Polytechnic Institute, Department of Economics.
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
- L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise
- O3 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-11-18 (All new papers)
- NEP-EDU-2006-11-18 (Education)
- NEP-EFF-2006-11-18 (Efficiency & Productivity)
- NEP-HRM-2006-11-18 (Human Capital & Human Resource Management)
- NEP-INO-2006-11-18 (Innovation)
- NEP-SOG-2006-11-18 (Sociology of Economics)
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