In 2011, the US government spent more than 140 billion dollars to fund research activities at basic, applied, and development levels in a wide range of fields including biomedical sciences, energy, space, environment, and defense. Governments invest in research activities to foster advanced high-tech discoveries and to help develop and maintain high-skilled research workforce. But to what extent, does government spending result in the desired outcomes? 

We take the event of increasing funding of NIH in 1998-2003 as an exogenous shock to the system, and conduct a difference-in-difference analysis of the productivity of postdoctoral researchers. NIH experienced a huge growth in funding in a relatively short time period after 1998. The funding was doubled from $13.6 billion in 1998 to $27.1 in 2003. In comparison to other fields, the ratio of NIH funding to all other federal research funding in the US increased dramatically from 0.57 in 1998 to 0.8 in 2001 and 0.92 in 2003. It is expected that such a huge shock in a relatively short time period in research funding to have impacts on research activities that are related to NIH. We look at the effects of government research spending on researchers’ productivity, by focusing on the population of postdoctoral researchers in biomedical sciences. Our analysis is based on data from the 1995, 2001, and 2003 of Survey of Doctorate Recipients, conducted by the National Science Foundation.

Our dependent variables are average postdoctoral researcher duration, average number of publications, average conference papers, and average salary for different citizen groups of the population of postdoctoral researchers (US citizens, permanent residents, and temporary visa holders). We control for age, gender, race, research activity, university rank, and postdoctoral researcher duration and salary were used as independent variable when we use conference papers and publications as dependent variables.

In the first round of analysis, we find that in comparison to different control groups, more government spending has resulted in that postdoctoral researchers in biomedical field stayed around 3 more months (p <.05), their salary was increased as much as $2,353 (p <.01) than non-biomedical field.   However, when the population of analysis is segmented by citizenship, we find that effects of funding have been different for different groups of researchers. Specifically, US-citizen postdoctoral researchers stayed longer in postdoctoral research positions by 4 months (p <.05).  However, permanent residents have produced more conference papers by 1.87 (p <.05), without significant changes in postdoctoral researcher duration. 

The analysis has several policy implications. Our study shows that different groups of researchers experience different effects as results of change in government funding. A careful consideration of variety of effects is required in order to maintain a balance in diversity of the scientific workforce and have adequate domestic workforce. Furthermore, the analysis implies that effects of change in funding can be more on attracting higher quality foreign workforce, then developing the current human resources.