Study highlights economic value for PhDs in the private sector

IRIS provides data on the public value of the research enterprise

IRIS provides data on the public value of the research enterprise

Students who graduate with doctorate degrees disproportionately find employment in large, high-wage entities of the private sector, a new study indicates.

In many cases, these jobs are clustered near universities where the doctoral recipients conducted their research and received training – thereby contributing to local and national economic growth.

Researchers from the University of Michigan, Georgia State University, Ohio State University, New York University and the Census Bureau investigated where research-funded PhDs go when they graduate, with a particular focus on those who enter the private sector.

One important, but little understood way that federal and nonfederal investments in research affect the economy is through the movement of highly trained people, the researchers say.

“For the very first time, this (study) lets us see pay rates, geographic locations and characteristics of employers for recent PhDs who leave the academy for industry,” said Jason Owen-Smith, U-M professor of sociology and executive director of the Institute for Research on Innovation & Science. “It bears on key questions in higher education, science policy, labor economics, entrepreneurship and innovation.” Owen-Smith is also a research professor at the U-M Institute for Social Research (ISR), where the Institute for Research on Innovation & Science is based.

The researchers used data from UMETRICS, an initiative developed in the Committee on Institutional Cooperation. UMETRICS combined university data with U.S. Census Bureau data to trace where doctoral recipients from eight Big Ten universities – Indiana, Iowa, Michigan, Minnesota, Ohio State, Purdue, Penn State and Wisconsin – obtained jobs.

The study captures what the researchers call the “human dimension” of the impact of funded research on the economy. The authors collaborated for more than seven years to determine how to measure the economic effects of research funding meaningfully, and to replace rough estimates with firmly quantifiable metrics.

The study is based on information for 3,197 doctoral recipients who were employed in sponsored research from 2010 to 2012. Forty percent of them took jobs in the private sector. The others accepted academic or government positions. Those entering private industry “disproportionately get jobs at large and high-wage establishments in high tech and professional service industries,” according to the study.

Establishments that employ doctoral recipients pay a median salary almost $30,000 greater than that paid by research-and-development organizations and nearly $60,000 more than the average payroll per worker in the private sector.

The data also show that newly minted engineers and computer scientists are most likely to go to young firms. The fields with the highest earners for recent graduates are mathematics and computer sciences, and engineering, the study shows.

While average earnings are relatively low for those with a doctorate in biology (perhaps because many life scientists initially take jobs as postdoctoral researchers in academia), across all of the science fields doctoral recipients who go into the private sector are more likely to go to establishments with high payrolls per worker and other business characteristics associated with high productivity.

The newly published study, which appears in Science, was led by Owen-Smith and professors Julia Lane of NYU and Bruce Weinberg of OSU. Other authors include: Nikolas Zolas, Nathan Goldschlag, Ron Jarmin, Paul Stephan, Rebecca Rosen and Barbara McFadden Allen.

The study, “Wrapping it up in a person: Examining employment and earnings outcomes for Ph.D. recipients,” is the first report from the Institute for Research on Innovation & Science located at the Institute for Social Research. IRIS is funded by the Ewing Marion Kauffman and Alfred P. Sloan foundations.

Founded in January 2015, IRIS is a national collaborative that builds the data and tools that allow researchers, government agencies, policymakers and others to better understand areas, such as career trajectories of student and faculty researchers in new or existing companies, and job creation due to vendor spending, innovation and entrepreneurship.

The institute currently has 25 university members that together represent $15 billion in federal research and development expenditures, which is about 23 percent of the national total for academic institutions.

University Record news release, by Jared Wadley.

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