The Effect of Earmarking and Set-Aside Programs on Research Funding and Productivity

A. Payne

Since WWII, the federal government has played a significant role in funding basic and applied research at U.S. universities. In general, agencies have adopted a peer-reviewed process for distributing research funding to universities. This process attempts to elicit information from researchers engaged in similar research about the quality of the projects for which funding is sought, seeking to minimize the politics associated with federal agencies and Congress. Although the federal government was interested in promoting research and development as one means to strengthen economic development, the issues surrounding what universities would be the recipients of federal funding were not addressed early on. By the late 1970s, a majority of research funding was concentrated in a few universities located within a few states. As such, politicians have been concerned about this issue and interested in finding ways to reduce the concentration without reducing the effectiveness of the research funding. The purpose of this paper is to explore how the distribution of research funding across universities has changed over the last thirty years as well as to explore the effects of two types of funding programs that were initiated in the early 1980s to combat the problems associated with high levels of concentration of research funding on research activities. The first “program” is known as earmarking and consists of a line item in the federal budget or accompanying documents that specifies a designated amount be allocated to a particular university. The second program is one that was first initiated by the National Science Foundation and has since been adopted by most of the agencies responsible for distributing federal research funding. This program is one that targets universities in states that have historically received low levels of funding. The program offers competitive grants designed to help build the infrastructure needed to compete effectively in the general grant programs within the agencies. The analysis uses a panel data set covering close to 30 years of data on earmarked funding, federal research funding, and academic publications for most research and doctoral universities. The results suggest there has been a modest change in the distribution of research funding across research and doctoral universities, especially since 1990. The results also suggest that funding from earmarked appropriations increased the quantity of academic publications but decreased the quality of these publications as measured by citations per publication. Those universities that qualified under the set-aside programs, however, increased the quality of their publications while decreasing the quantity of publications produced.

About A. Payne

Currently I am an assistant professor at the University of Illinois, holding a joint appointment in the Institute of Government & Public Affairs (system wide) and the Public Administration Program (Chicago campus). I am in the process of making a transition to McMaster University where I have been appointed as an associate professor in the Department of Economics. Prior to becoming a professor, I received my Ph.D. in economics from Princeton University (1995), a J.D. from Cornell University (1986), and a B.A. in mathematics and economics from Denison University (1983). In between law school and the start of my Ph.D. degree, I practiced law for five years at a private law firm in Washington, D.C. My research focuses generally on public economics issues, especially with understanding the political economy of various government programs and actions as well as the relationship between the government and various educational and nonprofit organizations. With respect to my research in education, in the higher education area, I have focused my research on understanding the relationship between research funding and the sources of this funding on research and other activities. I am also working on issues that concern the impact of state governance structures of public universities on research and other activities. In the K-12 area, I have looked at the impact of school finance reform on student achievement and am currently engaged in a project that is aimed at understanding the differences in student performance in urban and non-urban school districts.