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Are elite universities losing their competitive edge?

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  • Kim, E. Han
  • Morse, Adair
  • Zingales, Luigi

Abstract

We study the location-specific component of research productivity for economics and finance faculty over the last three decades. We find that there was a positive effect of being affiliated with a top 25 university in the 1970s; this effect weakened in the 1980s and disappeared in the 1990s. The decline in elite university fixed effect is due to the reduced importance of physical access to productive research colleagues, which in turn seems due to innovations in communication technology. One implication is that knowledge-based organizations should find it more difficult to capture rents vis-à-vis workers. We find that faculty salaries increased the most where the estimated spillover dropped the most. Despite the loss in local spillovers, elite universities still enjoy an edge in average productivity because of agglomeration of top researchers in prestigious institutions with high long-term research reputations.

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  • Kim, E. Han & Morse, Adair & Zingales, Luigi, 2009. "Are elite universities losing their competitive edge?," Journal of Financial Economics, Elsevier, vol. 93(3), pages 353-381, September.
  • Handle: RePEc:eee:jfinec:v:93:y:2009:i:3:p:353-381
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    Keywords

    Faculty productivity Firm boundaries Knowledge-based industries Theory of the firm;

    JEL classification:

    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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