世界银行-联邦研究资金与科学、技术、工程和数学教育 Federal Research Funding and STEM Education

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PoLicyREsEARcHWoRkiNGPApER11411

FederalResearchFundingandSTEMEducation

EmilyE.Cook

DevakiGhose

EkaterinaKhmelnitskaya

WORLDBANKGROUP

DevelopmentEconomics

DevelopmentResearchGroupJune2026

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fordirectaccess.

PoLicyREsEARcHWoRkiNGPApER11411

Abstract

Thispaperexamineshowfederalscienceandengineeringresearchfunding—althoughintendedtoadvanceresearch—affectsdegreeproductionandprogramsofferedinscience,technology,engineering,andmathematics(STEM).Usingdatafrom1971–2016,thestudyimplementsatriple-dif-ferencedesignthatexploitsvariationacrosscolleges,time,andfieldsofstudy.Thefindingsshowthatfederalgrantsgenerate27.4percentofdoctoratesand14.7percentofundergraduatescience,technology,engineering,andmath-ematicsdegrees,aswellas6.3percentofdoctoralprograms

and3.7percentofundergraduateprogramsinscience,tech-nology,engineering,andmathematicsannuallyacross200U.S.researchuniversities.Theimpactsareconcentratedinbiologyandengineering,aligningwiththeprioritiesofmajorfunderssuchastheDepartmentofHealthandHumanServices,theNationalScienceFoundation,andtheDepartmentofDefense.Thesefindingssuggestthatresearchgrantstouniversitiesmaygeneratea“doubledivi-dend,”simultaneouslyexpandingthesupplyofskilledlaborintargetedfieldswhilealsoadvancingscientificdiscovery..

ThispaperisaproductoftheDevelopmentResearchGroup,DevelopmentEconomics.ItispartofalargereffortbytheWorldBanktoprovideopenaccesstoitsresearchandmakeacontributiontodevelopmentpolicydiscussionsaroundtheworld.PolicyResearchWorkingPapersarealsopostedontheWebat

/prwp.Theauthors

maybecontactedatdghose@

;

ecook4@

;

andekaterina.khmelnitskaya@sauder.ubc.ca.Averified

reproducibilitypackageforthispaperisavailableat

,click

here

fordirectaccess.

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ThePolicyResearchWorkingPaperSeriesdisseminatesthefindingsofworkinprogresstoencouragetheexchangeofideasaboutdevelopmentissues.Anobjectiveoftheseriesistogetthefindingsoutquickly,evenifthepresentationsarelessthanfullypolished.Thepaperscarrythenamesoftheauthorsandshouldbecitedaccordingly.Thefindings,interpretations,andconclusionsexpressedinthispaperareentirelythoseoftheauthors.TheydonotnecessarilyrepresenttheviewsoftheInternationalBankforReconstructionandDevelopment/WorldBankanditsaffiliatedorganizations,orthoseoftheExecutiveDirectorsoftheWorldBankorthegovernmentstheyrepresent.

ProducedbytheResearchSupportTeam

FederalResearchFundingandSTEMEducation

EmilyE.CookTexasA&MandCESifo

DevakiGhoseWorldBank

EkaterinaKhmelnitskaya

UBCSauderSchoolofBusiness

AuthorizedfordistributionbyRobertCull,ResearchManager,DevelopmentResearchGroup,WorldBankGroup

Keywords:federalresearchfunding,highereducation,STEM,majorchoice,innovation

JELCodes:H52,I23,I28,O31,O38

EmilyE.Cook:DepartmentofEconomics,

TexasA&MUniversity.ecook4@

.

DevakiGhose:DevelopmentEconomicsResearchGroup(DECRG),

WorldBank.dghose@

.

EkaterinaKhmelnitskaya:SauderSchoolofBusiness,StrategyandBusinessEconomicsDivision,UniversityofBritish

Columbia.ekaterina.khmelnitskaya@sauder.ubc.ca

.

Acknowledgments:WethankZacharyBleemer,SarahTurner,LauraSchechter,JessGoldberg,MichaelNguyen-Mason,andparticipantsattheCeMENTworkshop,SEA,APPAM,andAEFPconferences,aswellasseminarparticipantsattheNationalScienceFoundationforhelpfulfeedback.DanieraNandaAriefti,SimonCaicedoGraciano,NathanWise,andAidanChowprovidedexcellentresearchassistance.Allerrorsareourresponsibility.

1

1Introduction

Governmentresearchgrantsconstituteamajorsourceofsupportforacademicresearchworldwide.

1

IntheUnitedStates,federalagenciesspendover$60billionannuallyonuniversityresearchanddevelopment,largelymotivatedbythegoalofadvancingscientificdiscovery.

2

Yetuniversitiesjointlyproduceresearchandeducation,raisingacentralquestion:dopoliciesdesignedtostimulateresearchandinnovationalsoshapethesupplyofskilledworkerstrainedinthefieldstheytarget?

ConcernsaboutthesupplyofSTEMworkershavelongshapedpolicydebatesoverhowgovernmentpoliciescanhelpexpandthesupplyofskilledlabor(Atkinson

1990

;PCAST

2012

;Bloometal.

2020

).Whilepublicresearchfundingpromotesinnovation(Babinaetal.

2023

),researchsupportandeducationalaccessareoftenviewedascompetingprioritiesforscarcepublicfunds(Akcigit,Pearce,andPrato

2025

).Yetfederalresearchsupportplayedanimportantrolenotonlyinpromotingtechnologicalinnovation,butalsointrainingstudents—aneffectthatwassuggestedbytheNationalResearchCouncilinthe1990s(NationalResearchCouncil

1999

).Ifresearchfundingexpandseducationalcapacity,investmentsinresearchneednotcomeattheexpenseofeducation,asthetwoobjectivesmaybemorecomplementarythancommonlyperceived.

Thispaperstudieswhetherfederalscienceandengineering(S&E)researchfunding—themostprominentformofgovernmentresearchsupport—affectstheproductionofhumancapitalinSTEMfields,measuredthroughchangesinthenumberofSTEMgraduatesanddegreeprogramsatthedoctoral,master’s,andbachelor’slevelsinU.S.universities.Whileresearchgrantsdirectlyfinancefacultyresearch,laboratories,andgraduateresearchers,universitiesmayrespondmorebroadlybyexpandinginstructionalcapacity,attractingstudentstowardfundeddisciplines,andintroducingnewacademicprograms.Ifso,researchfundingmayinfluencenotonlyinnovationoutcomesbutalsothelong-runcompositionoftheskilledworkforce.

WeaddressthisquestionbylinkingdegreecompletiondatafromtheNationalCenterfor

1In2021,G7countriesspentbetween0.34%(Italy)and0.66%(Canada)ofGDPonR&Dinthehighereducationsector,withU.S.spendingatapproximately0.36%(StatisticsCanada

2024

).

2Source:

/pubs/nsf26305.

2

EducationStatistics(NCES)withagency-university-yearfundingdatafromtheNSF’sNCSES,creatingapanelthatextendsbackto1971.Ourempiricalstrategyusesatriple-differencedesign,comparingSTEMandnon-STEM(control)outcomeswithinthesameuniversityovertimeasfederalresearchfundingchanges.Thisapproachcontrolsforuniversity-levelfactorsthatvaryovertimeandmaybecorrelatedwithresearchfundingandeducationaloutcomes,relyinginsteadonthecomparisonbetweenfundedfields(STEM)andnon-fundedfieldsovertimeandacrosscolleges.

Apotentialconcernwiththetriple-differencemethodisspilloversacrossfields—eitherpositive,ifS&Efundingindirectlybenefitsotherfieldsthroughuniversitiesreallocatingresourcesinternally,ornegative,ifstudentsswitchfields.Theavailabilityofmultiplenon-STEMfieldsascontrolsallowsidentificationtodrawonalternativecomparisongroups,mitigatingconcernsthatspilloversaffectinganysinglefielddrivetheresults.WealsoaddresspotentialconcernsaboutspilloversbyestimatingtheeffectofS&Eresearchfundingonnon-STEMfieldsusingtwo-wayfixed-effectsregressionswithextensivecontrols.Wefindlittleevidenceofmeaningfulspilloversformostfields.Further,toaddresstime-varyingconfounders—forexample,STEM-specifictrendscorrelatedwithgrantfundingincreases—weconductplacebotestsbyregressingoutcomesonfuturefederalfunding.Finally,toassessthepossibilityofheterogeneityintreatmenteffects,weperformseparateanalysesformultipletimeperiodsandforuniversitieswithabove-orbelow-medianenrollment,andabove-orbelow-mediangrantsatbaseline.

Wedocumenttwomainfindings.First,increasesinfederalresearchfundingsubstantiallyexpandSTEMdegreeproductionatalllevelsofuniversityeducation.Fundingincreasesraisedoctoralandmaster’sdegreecompletionandgeneratesizeablespilloverstoundergraduateeducation—eventhoughundergraduatestudentsarerarelydirectlysupportedbyresearchgrants.Onaverage,theaggregateannualfederalS&Eresearchfundingtouniversitiessupportsroughly4,400doctoral,9,700master’s,and18,400bachelor’sdegreesovertheawardyearandthefollowingsixyears,accountingfor27.4percent,22.5percent,and14.7percentofSTEMdegreesawardedannuallyinoursample.

3

Thesemagnitudesindicatethatfederalresearchfundingaccountsforasubstantial

3Weallowforthegrantstohaveaneffectuptosixyearsinthefuture,accountingforthepossibilitythatagranttakessometimetospend,affectinstruction,andthenshowupingraduationnumbers.ThetimeframeischosentoreflectthetypicaldurationofaPhDprogram.

3

shareofSTEMhumancapitalformationintheUnitedStates.

Second,universitiesrespondalongtheextensivemarginbyexpandingcapacityandbroadeningtherangeofeducationalofferingsinfundedfields.AggregateannualS&Efundingtouniversitiesleadstothecreationofroughly161doctoralprogramsacrossresearchuniversitieswithinsevenyearsoffunding—about6.3percentoftheaveragenumberofdoctoralprogramsoffered.Similareffectsemergeatotherdegreelevels,withapproximately136additionalmaster’sprogramsand135undergraduateprograms,representing4.3percentand3.7percentofthecorrespondingprograms.Theseresultsindicatethatresearchfundinginducespersistentinstitutionalexpansionratherthanonlytemporaryenrollmentadjustments.Introducinganewprogramcouldinvolvedevelopingentirelynewcourseworkand/orformalizingexistingclustersofcoursesintonewprograms.Forexample,auniversitywithanexistingprogramin“ComputerandInformationSciences”or“ElectromechanicalEngineeringTechnology”mayestablishmorespecializedprogramssuchas“ArtificialIntelligence”or“RoboticsTechnology”.

DisaggregatingtheoverallSTEMeffectbysubfield—EngineeringincludingComputerScience,Biology,Physics,Mathematics,andEconomics—showsthattheeffectsareprimarilydrivenbyEngineeringandBiology.Thisreflectsthefundingcomposition:throughoutmostofourpanel,overhalfoftotalS&EfundingcamefromtheDepartmentofHealthandHumanServices(HHS),whichismorelikelytosupportresearchinBiologicalSciences.Otherlargefunders,suchastheNSFandtheDepartmentofDefense(DOD),allocateasubstantialshareoftheirfundingtoEngineeringandComputerScience.Incontrast,thephysicalsciences,mathematics,andeconomicsreceivecomparativelylessfederalresearchsupport.

Twoconsiderationshelpinterprettheseresults.First,federalresearchfundingisprimarilyintendedtosupportscientificresearch—notstudenteducation—withmostspendingdirectedtowardsalaries,subcontractors,andequipment(NCSES

2024

).Thus,ourestimatesreflectindirectspilloversoneducationaloutcomes.Thesespillovers,however,representanimportantchannelthroughwhichgovernmentsupportforuniversity-basedresearchcanshapestudentskillacquisitionand,ultimately,thelaborsupply.Second,federalgrantsmaycrowdinadditionalprivateorinstitutionalfunding(Lanahan,Graddy-Reed,andFeldman

2016

).Totheextentthatfederalsupport

4

triggerssuchcomplementaryinvestment,ourestimatescapturethebroaderimpactofresearchfundingonuniversityexpansion.

Whileouranalysisfocusesonestimatingtheeffectsoffederalresearchfundingoneducationaloutcomes,severalmechanismsmayunderlietheseresponses.Researchfundingcanattractgraduatestudentsthroughexpandedresearchopportunitiesandassistantships,whileattheundergraduatelevelitmayincreaseinstructionalcapacitybysupportinggraduateteachingandresearchpersonnel.Morebroadly,researchactivitymayalterstudentdemandanddepartmentalresourcesinfundedfields.Whileouranalysisdoesnotidentifytheunderlyingmechanisms,wediscussseveralplausiblechannelsinSection

6

.

Broadly,ourresultsunderscorethatgovernmentresearchfundingdirectedtouniversitiesdoesmorethangeneratescientificoutput:itsimultaneouslyexpandsthesupplyofhumancapitalinthetargetedfields.Becauseuniversitiesjointlyproduceresearchandeducation,theycanleveragecomplementaritiesacrosstheseactivities,allowingresearchsupporttotranslateintoincreaseddegreeproductionandnewprogramcreation.Inthisway,federalresearchfundingshapesnotonlyinnovationbutalsothestructureoftheSTEMtalentpipeline.

Previousworkontheeffectsoffederalresearchfundingatuniversitieshasprimarilyfocusedonresearch,innovation,andentrepreneurship(PayneandSiow

2003

;JacobandLefgren

2011

;A˚stebroandBazzazian

2011

;Corredoira,Goldfarb,andShi

2018

;Myers

2020

;MyersandLanahan

2022

;Babinaetal.

2023

).Moststudiesfindapositiveeffectontheseoutcomes.Morecloselyrelatedtoourworkarestudiesthatexaminegraduatestudentoutcomesinresponsetointerruptionsinfederalgrantsatthelablevel(Tham

2023

;Thametal.

2024

),andtograntsawardeddirectlytograduatestudents(Chandler

2018

;Graddy-Reed,Lanahan,andD’Agostino

2021

;Graddy-Reed,Lanahan,andRoss

2018

;Shvadronetal.

2025

).

4

Wecontributetothisliteraturebyexaminingtheeffectoffederalfundingawardedtofaculty—thepredominantformoffunding—onSTEMeducationatalllevels.

OurworkalsocontributestothebroaderdiscussiononR&Dandeducation(seeBiasi,Deming,

4Shvadronetal.(

2025

)usedataonorganizationslistedindissertationacknowledgments,whicharemorelikelytocapturesupportfromgrantsorfellowshipsawardeddirectlytostudents.

5

andMoser

2022

forareview).Priorresearchsuggeststhatwhenthesupplyofscientifictalentisinelastic,governmentR&Dfundingmayprimarilyraisescientists’wageswithlittleeffectonresearchoutput(Goolsbee

1998

).Therefore,expandingR&Dactivitymightrequireincreasingthepoolofpotentialresearchers(Romer

2001

),inwhicheducationplaysanimportantrole(BianchiandGiorcelli

2020

;Akcigit,Pearce,andPrato

2025

).WeaddtothisdiscussionbyshowingthatfederalR&Dfundingtouniversitiescandirectlyexpandthepipelineofrelevanthumancapitalthroughspilloversoneducation.

Finally,ourworkcontributestotheliteratureonuniversities’incentivestoofferdifferentcoursesandprograms(Conzelmann

2024

;Thomas

2024

)andtheassociatedcostdifferences(AltonjiandZimmerman

2019

;Hemeltetal.

2021

),byshowingthatincreasesinfederalresearchfundingtoS&Edepartmentscanexpandprogramofferingsinrelatedfieldsofstudy.

2HistoricalBackground:FederalResearchFundingandSTEMEducationintheU.S.

FederalresearchfundingtouniversitiesexpandedsignificantlyduringWorldWarII(GrossandSampat

2023

).Beforethewar,mostuniversityresearchwasfundedbyprivatefoundationsandstates,whilethefederalgovernmentcontributedtonationalR&Dprimarilythroughworkconductedinitsownseparatelaboratories(NationalResearchCouncil

1995

).Thisshiftedduringthewartowardextramuralfunding,withuniversitiesreceivingthelargestcontracts(GrossandSampat

2023

).Throughoutthe20thcentury,theU.S.governmentsubstantiallyincreaseditssupportforSTEMfieldsandhasremainedamajorfunderofuniversity-basedS&Eresearch,withitsshareaveragingaround61%from1953to2023(U.S.NSF

2025

).

InparallelwitheffortstosupportS&Eresearchatuniversities,therehaslongbeeninterestinfederalpoliciestostrengthenSTEMeducation.TheNationalDefenseEducationActof1958providedfederalfundingtostrengthenscience,math,andforeignlanguageeducation,recognizingtheirstrategicimportancetonationalsecurity.Fromthe1960stothe1980s,federalagencies,especiallytheDefenseAdvancedResearchProjectsAgency(DARPA)oftheDOD,playedakey

6

roleinestablishingmajorcomputersciencedepartments(Aspray

1985

).Inthe2000sand2010s,concernsaboutSTEMworkforceshortagesgainedprominence,withmultiplereportsfromtheNationalAcademiesandUSPresident’sadvisorybodiescallingforgreaterinvestmentinSTEMeducation(Carnevale,Smith,andMelton

2011

;Mervis

2014

).WhiledirectfederalfundingforSTEMeducationremainssmallcomparedtoresearchsupport,theseinitiativescontinue.

5

Morerecentpoliciesfocusoneducationinartificialintelligence(AI)andsemiconductors,reflectingcurrentdemandforSTEMtalentdrivenbytheriseofAI,competitionwithChina,andeffortstoonshorecriticalR&D-intensiveindustries(West

2023

;Zwetslootetal.

2021

;Cohen

2024

).Forexample,in2023,DARPAallocated$9milliontoestablishmaster’sprogramsinAIandmachinelearningatmultipleuniversities(GovernmentTechnology

2023

).Theseinitiativesshowcasepolicymakers’interestinexpandingeducationalofferingsinSTEMfieldsconsideredimportantforgrowthandinnovation,aswellasfromanationalsecurityperspective.WhileassessingwhetherU.S.STEMgraduationratesshouldbeincreasedthroughpolicyinterventionliesbeyondthescopeofthispaper,wehighlightthatfederalresearchfundingindirectlyexpandsSTEMtrainingandprogramofferings,despitethesenotbeingitsprimaryobjectives.Recognizingthesespillovereffectsisimportantwhenconsideringhowgovernmentfundsshouldbeallocated.

3Data

Dataonuniversitycharacteristics,programs,anddegreecompletionscomefromtheNCSESIntegratedPostsecondaryEducationDataSystem(IPEDS)anditspredecessor,theHigherEducationGeneralInformationSurvey(HEGIS),whichreportcompletionsbylevel,field,andgender.InformationonfederalgrantsandcontractsisdrawnfromtheNCSESFederalScienceandEngineeringSupportSurvey,whichcollectsdatafromfederalagencies.Ouranalysisfocusesonresearchuniversities,whichreceivethemajorityoffederalgrantfunding.Specifically,weincludeallinstitutionswithadoctoralorresearchdesignationinthe1987CarnegieClassification.WemeasurethenumberofprogramsanddegreescompletedbyfieldusingtheClassification

5Forinstance,in2010,13federalagenciesinvestedapproximately$3billion(or$3.39billionin2017dollars)inSTEMeducationprograms,comparedto$34billion(in2017dollars)infederalsupportforuniversityR&D(Scott

2013

;U.S.NSF

2025

).

7

ofInstructionalPrograms(CIP),introducedbyNCESin1985.PriortoCIP,HEGISusedadifferentclassificationsystem.CIPwassignificantlyrevisedin1990and2000,andNCESprovidescrosswalkstolinkversionsovertime.OurprogramclassificationsarelistedinTable

A.10

.Theprogramsinouranalysisaredefinedbysix-digitCIPcodes(andtheirearlierHEGISequivalents).

Ourdatacovertheyears1971–2016,thoughsomevariablesaremissinginspecificyears.Mostnotably,dataongraduationsandprogramsbyfieldareunavailablefortheacademicyears1974-75,1982-83,and1985–86.Tables

1

and

2

presentsummarystatisticsforselectedyearsbetween1975and2015.

6

Overthisperiod,boththeaveragenumberofprogramsanddegreesawardedincreasedsubstantially.ThemostpronouncedgrowthindegreesoccurredinfieldslikeBusinessandCommunications,Health,andSTEM.

7

WithinSTEM,growthwasdrivenprimarilybyEngineering,withadditionalcontributionsfromBiologicalSciencesand,fordegrees,Mathematics.

PanelBinTable

2

highlightstheevolutionofuniversity-levelcharacteristicsandourprimarytreatmentvariable:theannualFederalS&Eresearchfundingobligatedtouniversities.

8

TheaverageS&Efundingrosefrom$70millionin1975to$137millionin2015,drivenlargelybyfundingfromtheDepartmentofHealthandHumanServices(HHS),whichallocatesresearchfundsthroughagenciesliketheNationalInstitutesofHealth(NIH).HHSfundingaloneincreasedby149%,anditsshareoftotalS&Efundinggrewfromjustunder50%in1975toover60%by2015.

4EmpiricalStrategy

Ourempiricalstrategyreliesonatriple-differencesframeworkthatexploitsvariationacrossfields,universities,andtime.Specifically,wecompareoutcomesinSTEMfieldstooutcomesinnon-STEMfieldswithinthesameuniversity,asfederalscienceandengineeringresearchfundingtothatuniversitychangesovertime.Thisdesigndifferencesout(i)time-invariantdifferencesacrossfieldswithinauniversity,(ii)commontimeshocksaffectingallfieldswithinauniversity,and(iii)

6Throughout,weuse“BA”and“MA”toreferbroadlytoallbachelor’sandmaster’sdegrees,includingBS/MSdegrees.Atthedoctorallevel,mostdegreesarePhDs.WeexcludeprofessionaldegreessuchasJDsandMDs.

7Thefieldsareconstructedbyaggregatingmultiple2-digitCIPcodes,asdetailedinTable

A.10

.BiologicalSciencesandBioengineeringareincludedunderSTEM.TheHealthfieldpredominantlyincludesprofessionalprograms,suchas,forexample,“Dentistry”or“HealthandMedicalAdministrativeServices”.

8WeincludeonlyR&Dexpenditures,excludingspendingoninstruction,training,andothernon-researchactivities.

8

commonnationalfield-specifictimeshocks,allowingustoisolatethedifferentialresponseofSTEMoutcomestochangesinfederalresearchfunding.Weclassifynon-STEMfieldsintofivecategories,eachofwhichcanserveasacontrolgroup.InSection

4.1

,wediscussourapproachusingeachfieldseparately,aswellasourpreferredspecification,whichaveragestheestimatesacrossthesefield-specificregressions.

Inthissection,wealsodescribemethodstoaddresstwopotentialthreatstoidentification.Thefirstinvestigatesthepossibilityofspilloversacrossfields,whichwouldrendernon-STEMfieldsaninvalidcontrolgroup.Weprovidesomereassuranceonthispointbyusingmultipledifferentnon-STEMfieldsseparatelyascontrolsinthemaintriple-differencespecification,butwealsotestdirectlyforspilloversusingadifference-in-differencesapproachthatleveragesvariationacrosstimeanduniversities.WepresentthismodelinSection

4.2

.Thesecondpotentialconcernisthepossibilitythatourestimatescapturefield-university-specifictrendsovertime—orrelatedly,reversecausality,whichcouldoccurifhavingmorestudentsleadstomoregrants.Eitherofthesemechanismscouldcausecurrentgraduationtobecorrelatedpositivelywithfuturefunding.InSection

4.3

,weshowourspecificationfortestingthispattern.

4.1Baselinespecification

TostudytheeffectoffederalscienceandengineeringgrantfundingonthenumberofdegreeprogramsandgraduatesinSTEM,weestimatethefollowingtriple-differenceregression:

Yjft=τβ1,t_τ1{f=STEM}×FSEj,t_τ+β2Xjft+δjt+γjf+νft+εjft(1)

whereYjfltistheoutcomeforuniversityj,fieldf,inyeartforoneofthethreedegreelevels:bachelor’s,master’s,ordoctoral(weestimatethisregressionseparatelyforeachdegreelevell).Inourbaselinespecification,fieldsfincludeSTEMandaNon-STEMcontrolfield:f∈{STEM,Non-STEM}.Ourclassificationincludesfivenon-STEMfields:ArtsandArchitecture,BusinessandCommunications,EducationandVocationalTraining,Health,andSocialSciences

9

andHumanities(seeTables

1

and

2

fordetails).Becauseseveralnon-STEMfieldsareavailableascontrols,thespecificationcanbeestimatedusingalternativecomparisongroups,ensuringthatresultsdonotdependonanysinglecontrolfield.Ourpreferredspecificationaveragestheeffectsacrossthesefield-specificregressions.

Outcomesanalyzedusingthemodeldescribedinequation(

1

)includethenumberofdegreesawardedandthenumberofprogramsofferedinagivenfield.ThevariableFSEj,t__τrepresentsthetotalamountoffederalscienceandengineeringresearchgrantsreceivedbyuniversityjinyeart__τ.University-by-yearfixedeffectsδjtabsorbinstitution-wideshockssuchaschangesinoverallenrollment,resources,oruniversity-specifictrendsovertime.University-by-fieldfixedeffectsγjfcontrolforpersistentdifferencesacrossfieldswithinuniversities,whichmayberelatedtoauniversity’scomparativeadvantageorinstitutionalmission,forexample.Field-by-yearfixedeffectsνftflexiblycapturenationaltime-shocksaffectingspecificfields,suchaschangesinaggregatedemandforSTEMeducation.Together,thesefixedeffectsensurethatidentificationcomesfromdifferentialchangesinSTEMoutcomesrelativetonon-STEMfieldswithinthesameuniversityasfederalresearchfundingvariesovertime.

Inadditiontothefixedeffects,weincludeadditionalcontrolsXjfttoaccountforchangestotheCIPsystemin1985,1990,and2000,whichintroducednewprogramcodesandreclassifiedsomeoftheexistingprograms.Weincludedummyvariablesindicatingthe“after”periodforeachofthesechangesandinteractthemwithuniversity-fieldfixedeffects.ThiscapturespotentialinteractionsbetweenCIPchangesanduniversities’curricula(whichweallowtodifferbetweenSTEMandnon-STEMfields).Forinstance,universitiesofferingmoreprogramsinfieldswheretheupdatedCIPintroducedmoredetailedclassificationsmaybemoreaffectedbytheclassificationadjustments. Apriori,itisunclearwhetherresearchfundingaffectsgraduationoutcomeswithinthesameacademicyearitisobligatedoriftheeffectsarelagged.Forexample,researchfundingcouldhaveanimmediateeffectbyenablingPhDstudentstocompletetheirresearchandgraduate.Additionalfundingmayalsoallowdepartmentstohiremoregraduateteachingassistantsandacquirelabequipment,therebycreatingmoreopportunitiesforundergraduatestoenrollinrequiredfield-specificcoursesduringtheirfinalyearsofstudy.Conversely,theeffectsmaybelaggedifthe

10

benefitsoffundingareprimarilyexperiencedbyincomingstudents,forexample,duetoenhancedteachingassistantsuppor