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Title: Schooling and R&D Externalities: Evidence from A Dual Growth Accounting Application to US States

Citation Type: Miscellaneous

Publication Year: 2011

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Abstract: In this paper, we evaluate the impact of schooling and Research and Development (R&D) expenditure on the multi-factor productivity (MFP) growth across US states. While the evidence of positive externalities from schooling has been disappointing in the regional literature, the evidence of externalities from R&D is seldom found at the state level in US. The paper argues that a state with higher level of education not only creates better ideas, but also is more favorable to adopt, implement and execute the newly available ideas and hence, to absorb the knowledge spillovers. Further, it is argued that the states with favorable R&D policies attract more efficient firms and hence, experience higher MFP growth. To achieve this, the paper extends the dual growth accounting exercise to construct MFP growth measures for the non-farm, non-mining, private sector for all US states. The key empirical findings of our paper suggest significant positive externalities from schooling and R&D once we control for the catch-up effect where poor states converge towards the rich states. This attributes an important role toschooling and R&D expenditure in closing the gap between the rich and the poor states, hence speeding up technological diffusion.

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Authors: Panda, Bibhudutta

Publisher: Wabash College

Data Collections: IPUMS CPS

Topics: Education, Other

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