Association for Public Policy Analysis & Management

There is an existing body of research that has identified a strong relationship between university research activity and local economic growth. That literature has primarily examined spillovers resulting from vendor/supplier relationships, technology transfer and commercialization licenses, coauthorship networks, or patent citations. Less attention has been paid to the idea that highly skilled workers serve as a conduit for transmitting ideas by transitioning from academia to private industry. Here, we explore this important channel using data detailing employment on sponsored research projects for a subset of UMETRICS universities linked with W2 and LEHD employment records. We first characterize individuals by their primary role in the laboratory, source of funding support, and the topical focus of their research. For those workers who transition out of academia, we trace out the short-run employment linkages in terms of detailed industry sector, geography, and firm characteristics. Using this rich mapping between academia and industry, we examine the impact of funding shocks to specific agencies and topical areas on the supply of highly trained workers. Specifically, we explore whether an increase in the supply of highly trained workers to a particular location and industry sector crowds out/in existing workers. In addition, we examine whether these workers generate positive externalities benefiting local economies in terms of increased growth, sales, and business starts. The findings from our work provide new and exciting insights about how workers cross-pollinate ideas between the academy and private industry.