Federal Life Sciences Funding And University R&D

This paper investigates the impact of federal extramural research funding on total expenditures for life sciences Research and Development (R&D) at U.S. universities, to determine whether federal R&D funding spurs funding from non-federal (private and state/local government) sources. The authors use a fixed effects instrumental variable approach to estimate the causal effect of federal funding on non-federal funding. The results indicate that a dollar increase in federal funding leads to a $0.33 increase in non-federal funding at U.S. universities.