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What if Congress Doubled R&D Spending on the Physical Sciences?

In: Innovation Policy and the Economy, Volume 9

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  • Richard Freeman
  • John Van Reenen

Abstract

Many business, academic, and scientific groups have recommended that the Congress substantially increase R&D spending in the near future. President Bush's American Competitiveness Initiative calls for a doubling of spending over the next decade in selected agencies that deal with the physical sciences, including the National Science Foundation. We consider the rationale for government R&D spending in the context of globalization and as an investment in human capital and knowledge creation with gestation times far longer than Federal funding cycles. To assess the impact of a large increase in R&D spending on the science job market, we examine the impact of the 1998- 2003 doubling of the NIH budget on the bio-medical sciences. We find that the rapid increase in NIH spending and ensuing deceleration created substantial adjustment problems in the market for research and failed to address long-standing problems with scientific careers that are likely to deter many young people from choosing a scientific career. We argue that because research simultaneously produces knowledge and add to the human capital of researchers, which has greater value for young scientists because of their longer future career life span than to older scientists, there is reason for funding agencies to tilt their awards to younger researchers.
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Suggested Citation

  • Richard Freeman & John Van Reenen, 2009. "What if Congress Doubled R&D Spending on the Physical Sciences?," NBER Chapters,in: Innovation Policy and the Economy, Volume 9, pages 1-38 National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:8182
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    References listed on IDEAS

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    1. Wolfgang Keller, 2004. "International Technology Diffusion," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 752-782, September.
    2. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    3. Bronwyn H. Hall & John van Reenen, 1999. "How Effective are Fiscal Incentives for R&D? A New Review of the Evidence," NBER Working Papers 7098, National Bureau of Economic Research, Inc.
    4. Lynne G. Zucker & Michael R. Darby & Marilynn B. Brewer, 1994. "Intellectual Capital and the Birth of U.S. Biotechnology Enterprises," NBER Working Papers 4653, National Bureau of Economic Research, Inc.
    5. Freeman, Richard B, 1975. "Supply and Salary Adjustments to the Changing Science Manpower Market: Physics, 1948-1973," American Economic Review, American Economic Association, vol. 65(1), pages 27-39, March.
    6. repec:hoo:wpaper:e-93-1 is not listed on IDEAS
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    Citations

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    Cited by:

    1. Boehm, Michael J. & Watzinger, Martin, 2010. "The Allocation of Talent: Evidence from the Market of Economists," MPRA Paper 27463, University Library of Munich, Germany.
    2. Urban Sila, 2009. "Can Family-Support Policies Help Explain Differences in Working Hours Across Countries?," CEP Discussion Papers dp0955, Centre for Economic Performance, LSE.
    3. Ana Rincon-Aznar, 2009. "Rates of return and alternative measures of capital input: 14 countries and 10 branches, 1971-2005," National Institute of Economic and Social Research (NIESR) Discussion Papers 347, National Institute of Economic and Social Research.
    4. Michael Boehm & Martin Watzinger, 2012. "The Allocation of Talent over the Business Cycle and its Effect on Sectoral Productivity," CEP Discussion Papers dp1143, Centre for Economic Performance, LSE.
    5. repec:eee:tefoso:v:127:y:2018:i:c:p:97-111 is not listed on IDEAS
    6. Schuelke-Leech, Beth-Anne, 2014. "Volatility in federal funding of energy R&D," Energy Policy, Elsevier, vol. 67(C), pages 943-950.
    7. Boehm, Michael J. & Watzinger, Martin, 2010. "The Selection of Skills into Sectors: Evidence from the Market for Economists," MPRA Paper 23315, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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