IZA DP No. 11711: Money for Something: The Links between Research Funding and Innovation
Federal research funding to universities is often based on a desire to stimulate innovation – so that they spend taxpayer money for "something". There is growing understanding of the need to change the structure of research funding in order to do so; less is known about the effectiveness of different organizational structures. Yet, as Jones has pointed out, increasing the efficiency with which we transfer knowledge from one generation to the next could have important implications for innovation and productivity growth. In this paper we use new data to examine how the main organizational structure used to train the next generation of scientists and inventors – teams funded by research grants – leads to innovative activity as measured by patents.