Recent Research: Federal R&D boosts local economic development
The boost in federal R&D funds as a result of the 2009 stimulus package had a significant impact on local economic development, according to a new working paper from researchers at the University of Michigan.
The boost in federal R&D funds as a result of the 2009 stimulus package had a significant impact on local economic development, according to a new working paper from researchers at the University of Michigan. In “Local Fiscal Multiplier on R&D and Science Spending: Evidence from the American Recovery and Reinvestment Act” (ARRA), authors Yulia Chhabra, Margaret Levenstein, and Jason Owen-Smith look at changes in county-level employment in response to increased federal spending on R&D as a result of ARRA. The authors estimate causal effects of the ARRA R&D funding on local economic development, and find that, all else equal, every $1 million in new R&D spending due to the stimulus in a county led to 27 new jobs, with 25 of those being in the private sector. The authors estimate that the cost per each job-year was about $15,000, which is less than the reported costs of other types of federal stimulus programs.