Paper Title
Effects on Regional Employment from NIH and Venture Capital Funding: Evidence from The Medical Device Industry

Funding for scientific advancement comes from two dominant sources: public funds used to generate knowledge, and private sector funds in the pursuit of commercial products. It is not clear how to compare the outputs of these two financial mechanisms because both sectors are motivated by common goods but are also governed by divergent forces. Employment within a geographic region may be a metric of mutual value that can be applied equally to assess the societal impacts of two financing sources. We focused on a single industry, medical devices, which is a robust sector of growth for the United States economy. The US NIH and venture capital community are representatives of public and private capital, respectively. Using information from the Institute for Strategy and Competitiveness at Harvard University, we find that NIH funding creates as many as three times the number of jobs per million dollars compared with VC funding within 5 years of endowments. We also find that a major reason for the higher employment levels from governmental funding is due to an indirect effect from generated intellectual property seen in years 4 and 5, surpassing that of VC funding. These findings imply that policy decisions regarding enhancing regional employment should consider the typology of financial capital and its differential effects effectively. Index Terms- venture capital, NIH, innovation, Medical device industry, jobs