Local Fiscal Multiplier on R&D and Science Spending: Evidence from the American Recovery and Reinvestment Act

Abstract

We use detailed information about American Recovery and Reinvestment Act (ARRA) spending to identify the distinctive effects R&D stimulus had on county level employment dynamics. ARRA R&D and science funding was awarded to over half the counties in the country. Counties with research universities and existing manufacturing employment were more likely to receive funding. We estimate that, over the program’s five-year disbursement period, each one million USD in R&D and science spending was associated with twenty-seven additional jobs in the county that received the stimulus and one additional job in adjacent counties. The average cost of a job for a year was less than $15,000.