State Disinvestment in Higher Education: The Impact on Public Universities’ Patent Applications 
As states reduce funding for public universities in order to close budget gaps, what impact do these cuts have on the schools’ research productivity? This paper measures research output as the number of patent applications filed by public universities and approved by the U.S Patent and Trademark Office. To the best of the author’s knowledge, it is the first to study the role that state appropriations play in public universities’ patent production. The findings suggest that changes in state funding affect the number of approved patent applications from the schools; they indicate that reductions in state appropriations—what scholars and the popular press refer to as “state disinvestment in high education”—lead to fewer approved patent applications from public universities. In exploring the channels through which state appropriations may affect public universities’ research productivity, the author finds that state funding cuts prompt schools to reduce their research expenditures, especially the wages and salaries paid to research staff.
Key Findings
- Changes in state appropriations affect public universities’ research productivity, as measured by the number of approved patent applications; a reduction in state funding leads to fewer approved patent applications from public universities.
- Depending on which estimation methodologies are used, an increase of $13 million to $42 million in state appropriations to public research universities results, on average, in one additional successful patent application.
- State appropriations may have a lag effect on public universities’ research productivity. The impact of a reduction or rise in state funding may not be felt immediately, because schools generally respond to funding cuts or increases by making changes to their facilities, staff, or equipment over several years.
- Depending on which estimation methodologies are used, a $1 increase in state appropriations results, on average, in an increase of 15 cents to 21 cents in total research expenditures for a public research university and an increase of 11 cents to 15 cents in spending on researchers’ salaries and wages.
Exhibits
Implications
This paper’s findings suggest that state disinvestment in higher education reduces the research productivity of public universities by prompting schools to cut their research expenditures. Reductions in state appropriations for public universities could have even broader negative implications because, as earlier studies have shown, academic research often provides a foundation for innovations in high-tech industries and especially benefits the industries near the schools.
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.