Skip to main content

State Disinvestment in Higher Education: The Impact on Public Research Universities’ Patent Applications

System Working Paper 19-10 | Published November 25, 2019

Download PDF

Author

Bo Zhao Federal Reserve Bank of Boston

State Disinvestment in Higher Education: The Impact on Public Research Universities’ Patent Applications

Abstract

While state appropriations are the largest revenue source of the U.S. public university systems, they have declined significantly over the past several decades. Surprisingly, there is little empirical work on the effect of state appropriation cuts on the research productivity of public universities. Helping fill that gap, this paper is the first to examine the role that state appropriations play in public universities’ patent production. The results suggest that state appropriation cuts have a negative impact on the number of approved patent applications from public research universities. Lower state appropriations are shown to lead to a reduction in research expenditures, especially wages and salaries paid to research staff.