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The Growing Allocative Inefficiency of the U.S. Higher Education Sector

In: Science and Engineering Careers in the United States: An Analysis of Markets and Employment

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  • James D. Adams
  • J. Roger Clemmons

Abstract

This 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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Suggested Citation

  • 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.
  • Handle: RePEc:nbr:nberch:11627
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    References listed on IDEAS

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    1. Ronald G. Ehrenberg, 2002. "Studying Ourselves: The Academic Labor Market," NBER Working Papers 8965, National Bureau of Economic Research, Inc.
    2. John M. de Figueiredo & Brian S. Silverman, 2002. "Academic Earmarks and the Returns to Lobbying," NBER Working Papers 9064, National Bureau of Economic Research, Inc.
    3. James D. Adams, 2002. "Comparative localization of academic and industrial spillovers," Journal of Economic Geography, Oxford University Press, vol. 2(3), pages 253-278, July.
    4. Adam B. Jaffe & Manuel Trajtenberg, 2005. "Patents, Citations, and Innovations: A Window on the Knowledge Economy," MIT Press Books, The MIT Press, edition 1, volume 1, number 026260065x, January.
    5. Rothschild, Michael & White, Lawrence J, 1995. "The Analytics of the Pricing of Higher Education and Other Services in Which the Customers Are Inputs," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 573-586, June.
    6. Huffman, Wallace E. & Evenson, Robert E., 1993. "Science for Agriculture: A Long Term Perspective," Staff General Research Papers Archive 10997, Iowa State University, Department of Economics.
    7. Lucia Foster & John C. Haltiwanger & C. J. Krizan, 2001. "Aggregate Productivity Growth: Lessons from Microeconomic Evidence," NBER Chapters,in: New Developments in Productivity Analysis, pages 303-372 National Bureau of Economic Research, Inc.
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    Cited by:

    1. Goodall, Amanda H., 2009. "Highly cited leaders and the performance of research universities," Research Policy, Elsevier, vol. 38(7), pages 1079-1092, September.
    2. Raúl Ramos & Vicente Royuela & Jordi Suriñach, 2007. "An analysis of the determinants in Economics and Business publications by Spanish universities between 1994 and 2004," Scientometrics, Springer;Akadémiai Kiadó, vol. 71(1), pages 117-144, April.
    3. Zhang, Liang & Ehrenberg, Ronald G., 2010. "Faculty employment and R&D expenditures at Research universities," Economics of Education Review, Elsevier, vol. 29(3), pages 329-337, June.

    More about this item

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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