Investing in PhD Research Pays Off

Study finds that 40% of PhDs go to industry and boost economic growth

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Investing in PhD Research Pays Off
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It is easy to track how much the U.S. federal government invests in research every year. Tracking the output of that investment is a whole lot harder.

A research team led by economists at the National Bureau of Economic Research has now tried to measure the impact of public and private research investments by looking at the job outcomes of funded PhD recipients. They found that nearly 40% of federally and non-federally funded PhDs went to work in the industry. These graduates were more likely to get high-paying jobs, jobs in high-tech and professional service industries, and at firms that perform R&D.

All of these are characteristics correlated with higher productivity, the researchers say in a paper published in the December 10 issue of the journal Science. This shows that doctoral recipients transfer their knowledge out to the economic marketplace, boosting local and national economic growth.

Not much is known about where research-funded PhDs go after they graduate and enter the private sector. Even less is known about the traits of businesses that employ them. So the research team combined data from administrative records on fund-supported graduate students with employment and earnings records from the U.S. Census Bureau.

The analysis covered earnings and placement outcomes for around 3,200  PhD recipients between 2009­ and 2011 from eight U.S. public universities. A majority 57.1% of graduate students went to academia, presumably to postdoctoral positions. Of the 38.7% who found industry jobs, 17% went to R&D firms. 

Employers in the fields of engineering, high-tech and professional services including medicine were much more likely to hire PhDs than other U.S. employers at large. 

Graduates with engineering PhDs were most likely to go to industry, followed by those with degrees in math and/or computer science. Engineering and math/computer science PhD recipients also had the highest earnings, averaging more than US$65,000 a year. If only industry earnings were considered, the highest average earnings went up to almost $90,000 in mathematics and/or computer sciences and almost $80,000 in engineering.

Regardless of field, employers that hire PhDs tend to pay well. The median firm that hired PhDs paid just over $90,000 to each worker, and more than half of PhDs went to firms that had a payroll per worker of over $100,000.

Engineers with newly earned PhDs were most likely to go to R&D firms. Engineers, physicists, and computer scientists were also most likely to go to younger firms, which play an important role in economic growth.

In a press release, Carol Whitacre, vice president for research at Ohio State University, said:

“Congress and the public are very interested in understanding the impact of research and how to measure it. The traditional measures of publications and patents represent one approach. One of the largest investments in research is the training of future researchers. This article provides outcomes data on that investment.”

The researchers point to some important caveats of the study though. One is that the eight universities they studied might not represent academic research institutions since they are large public universities in the Midwest, many with large engineering programs and medical schools. Another is that the U.S.-based data limits the ability to track students who leave the country.

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