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Do Scientists Pay to Be Scientists?

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  • Scott Stern
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    Abstract

    This paper evaluates the relationship between wages and the scientific orientation of R&D organizations. Science-oriented firms allow researchers to publish in the scientific literature and pursue individual research agendas. Adoption of a Science- oriented research approach (i.e., Science) is driven by two distinct forces: a (a Preference effect) and R&D productivity gains arising from earlier access to discoveries (a Productivity effect). The equilibrium relationship between wages and Science reflects the relative salience of these effects: the Preference effect contributes to a negative compensating differential while the Productivity effect raises the possibility of rent-sharing between firms and researchers. In addition, because the value of participating in Science is increasing in the prestige of researchers, Science tends to be adopted by those firms who employ higher-quality researchers. This structural relationship between the adoption of Science and unobserved heterogeneity in researcher ability leads to bias in the context of hedonic wage and productivity regressions which do not account for such effects. This paper exploits a novel field-based empirical approach to substantially overcome this bias. Specifically, prior to accepting a specific job offer, many scientists receive multiple job offers, making it possible to calculate the wage- Science curve for individual scientists, controlling for ability level. The methodology is applied to a sample of postdoctoral biologists. The results suggest a strong negative relationship between wages and Science. For example, firms who allow their employees to publish extract, on average, a 25% wage discount. The results are robust to restricting the sample to non-academic job offers, but the findings depend critically on the inclusion of the researcher fixed effects. The paper's conclusion, then, is that, conditional on scientific ability, scientists do indeed pay to be scientists.

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    Bibliographic Info

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7410.

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    Date of creation: Oct 1999
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    Publication status: published as Stern, Scott. "Do Scientists Pay to Be Scientists?" Management Science 50, 6 (June 2004): 835-853.
    Handle: RePEc:nbr:nberwo:7410

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    Cited by:
    1. Jarle Møen, 2004. "When subsidized R&D-firms fail, do they still stimulate growth? Tracing knowledge by following employees across firms," Discussion Papers, Research Department of Statistics Norway 399, Research Department of Statistics Norway.
    2. Jarle Moen, 2005. "Is Mobility of Technical Personnel a Source of R&D Spillovers?," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 23(1), pages 81-114, January.
    3. Morris M. Kleiner & Richard B. Freeman, 2000. "Who Benefits Most from Employee Involvement: Firms or Workers?," American Economic Review, American Economic Association, American Economic Association, vol. 90(2), pages 219-223, May.
    4. Fiona Murray & Scott Stern, 2005. "Do Formal Intellectual Property Rights Hinder the Free Flow of Scientific Knowledge? An Empirical Test of the Anti-Commons Hypothesis," NBER Working Papers 11465, National Bureau of Economic Research, Inc.
    5. Stephane R. ROBIN, 2002. "The effect of supervision on Ph.D. duration, publications and job outcomes," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales), Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) 2002041, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    6. Goldfarb, Brent & Henrekson, Magnus, 2001. "Bottom-Up vs. Top-Down Policies towards the Commercialization of University Intellectual Property," Working Paper Series in Economics and Finance 463, Stockholm School of Economics, revised 26 May 2002.
    7. Lee Branstetter & Yoshiaki Ogura, 2005. "Is Academic Science Driving a Surge in Industrial Innovation? Evidence from Patent Citations," NBER Working Papers 11561, National Bureau of Economic Research, Inc.
    8. Goldfarb, Brent & Henrekson, Magnus, 2003. "Bottom-up versus top-down policies towards the commercialization of university intellectual property," Research Policy, Elsevier, Elsevier, vol. 32(4), pages 639-658, April.
    9. Glenna, Leland L. & Welsh, Rick & Ervin, David & Lacy, William B. & Biscotti, Dina, 2011. "Commercial science, scientists' values, and university biotechnology research agendas," Research Policy, Elsevier, Elsevier, vol. 40(7), pages 957-968, September.
    10. Davis, Lee N. & Davis, Jerome & Hoisl, Karin, 2009. "What Inspires Leisure Time Invention?," Discussion Papers in Business Administration, University of Munich, Munich School of Management 10457, University of Munich, Munich School of Management.
    11. Isabelle Recotillet, 2004. "Earnings of young doctorates in private jobs after participation to post-doctoral programs," Working Papers halshs-00086000, HAL.
    12. Beath, John & Owen, Robert F. & Poyago-Theotoky, Joanna & Ulph, David, 2003. "Optimal incentives for income-generation in universities: the rule of thumb for the Compton tax," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 21(9), pages 1301-1322, November.
    13. Lee Branstetter & Kwon Hyeog Ug, 2004. "The Restructuring Of Japanese Research And Development: The Increasing Impact Of Science On Japanese R&D," Discussion papers, Research Institute of Economy, Trade and Industry (RIETI) 04021, Research Institute of Economy, Trade and Industry (RIETI).
    14. Baron, David P., 2006. "Persistent media bias," Journal of Public Economics, Elsevier, Elsevier, vol. 90(1-2), pages 1-36, January.
    15. Nicola Lacetera, 2003. "Incentives and spillovers in R&D activities: an agency-theoretic analysis of industry-university relations," Microeconomics, EconWPA 0312004, EconWPA.
    16. Baron, David P., 2004. "Persistent Media Bias," Research Papers, Stanford University, Graduate School of Business 1845r, Stanford University, Graduate School of Business.
    17. Cassiman, Bruno & Veugelers, Reinhilde & Zuniga, Pluvia, 2009. "Diversity of science linkages and innovation performance: some empirical evidence from Flemish firms," Economics Discussion Papers 2009-30, Kiel Institute for the World Economy.
    18. Cassiman, Bruno & Veugelers, Reinhilde & Zuniga, Pluvia, 2007. "Science linkages and innovation performance: An analysis on CIS-3 firms in Belgium," IESE Research Papers, IESE Business School D/671, IESE Business School.
    19. Lee Branstetter & Reiko Aoki, 2005. "Is Academic Science Raising Innovative Productivity? Theory and Evidence from Firm-Level Data," Hi-Stat Discussion Paper Series, Institute of Economic Research, Hitotsubashi University d05-86, Institute of Economic Research, Hitotsubashi University.
    20. Goldfarb, Brent, 2008. "The effect of government contracting on academic research: Does the source of funding affect scientific output," Research Policy, Elsevier, Elsevier, vol. 37(1), pages 41-58, February.

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