https://www.nber.org/papers/w30416 Skip to main content * Subscribe * Media * Open Calls Close Search [ ] * Research EXPLORE Research + Findings o Working Papers o Books & Chapters o Lectures o Research Spotlights + Periodicals o The Digest o The Reporter o The Bulletin on Retirement and Disability o The Bulletin on Health o The Bulletin on Entrepreneurship o Periodicals Archive + Data & Business Cycles o Boston Research Data Center o Business Cycle Dating o Public Use Data Archive + Topics o COVID-19 o Unemployment and Immigration o Energy o Entrepreneurship o Trade * Programs & Projects EXPLORE Programs & Projects + Programs o Economics of Aging o Asset Pricing o Children o Corporate Finance o Development Economics o Development of the American Economy o Economic Fluctuations and Growth o Economics of Education o Environment and Energy Economics o Health Care o Health Economics o Industrial Organization o International Finance and Macroeconomics o International Trade and Investment o Labor Studies o Law and Economics o Monetary Economics o Political Economy o Productivity, Innovation, and Entrepreneurship o Public Economics + Working Groups o Behavioral Finance o Chinese Economy o Cohort Studies o Economics of Crime o Entrepreneurship o Household Finance o Innovation Policy o Insurance o Market Design o Organizational Economics o Personnel Economics o Race and Stratification in the Economy o Risks of Financial Institutions o Urban Economics + All Projects & Centers o Boosting Grant Applications from Faculty at MSIs o Center for Aging and Health Research o Conference on Research in Income and Wealth o Early Indicators of Later Work Levels, Disease and Death o Economics of Digitization o Gender in the Economy o Improving Health Outcomes for an Aging Population o Macroeconomics Annual o Measuring the Clinical and Economic Outcomes Associated with Delivery Systems o Oregon Health Insurance Experiment o Retirement and Disability Research Center o The Roybal Center for Behavior Change in Health o Science of Science Funding o Training Program in Aging and Health Economics o Transportation Economics in the 21st Century * Conferences * Affiliated Scholars * NBER News EXPLORE NBER News + Research in the News + Nobel Laureates + Featured Working Papers Archive * Career Resources EXPLORE Career Resources + RA Positions - at NBER + RA Positions - not at the NBER + Staff Positions at NBER + Calls for Fellowship Applications + Current Fellowship Recipients + PhD Candidates in Economics * About EXPLORE About + Leadership & Governance + Support & Funding + History + Standards of Conduct + Privacy Policy + Staff + Employment Opportunities at NBER * Subscribe * Media * Open Calls Search [ ] * Home * Research * Working Papers * Place-Based Productivity and Costs in... Place-Based Productivity and Costs in Science Jonathan Gruber, Simon Johnson & Enrico Moretti Share Twitter LinkedIn Email Working Paper 30416 DOI 10.3386/w30416 Issue Date September 2022 Cities with a larger concentration of scientists have been shown to be more productive places for additional scientists to do Research and Development. At the same time, these urban areas tend to be associated with higher costs of doing research, in terms of both wages and land. While the literature on the benefits of agglomeration economies is extensive, it offers no direct evidence of how productivity gains from agglomeration compare with higher costs of production. This paper aims to shed light on the balance between local productivity and local costs in science. Using a novel dataset, we estimate place-based costs of carrying out R&D in each US metro area and assess how these place-based costs vary with the density of scientists in each area. We then compare these costs with estimates of the corresponding productivity benefits of more scientist density from Moretti (2021). Adding more scientists to a city increases both productivity and production costs, but the rise in productivity is larger than the rise in production costs. In particular, each 10% rise in the stock of scientists is associated with a 0.11% rise in costs and a 0.67% rise in productivity. This implies that firms moving from cities with a small agglomeration of scientists to cities with a large agglomeration of scientists experience productivity gains that are 6 times larger than the increase in production costs. This finding is consistent with the increased concentration of R&D activity observed over the past 30 years. However, while the productivity estimate has only modest non-linearities, the cost estimates suggest much larger non-linearities as the concentration of scientists increases. For the most concentrated R&D cities, the difference between productivity gains and cost increases is close to zero. * Acknowledgements and Disclosures This paper was written for the volume "Entrepreneurship and Innovation Policy and the Economy", B. Jones and J. Lerner Eds., University of Chicago Press, forthcoming. We are grateful to Ben Jones, Josh Lerner and participants at the NBER conference Entrepreneurship and Innovation Policy and the Economy for their helpful comments. Lauren Rice provided excellent research assistance. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. Simon Johnson Simon Johnson sometimes speaks for a fee to financial sector groups. * Download Citation (*) MARC ( ) RIS ( ) BibTeKh Download Citation Data Related Topics Public Economics Labor Economics Regional and Urban Economics Programs International Trade and Investment Labor Studies Public Economics Productivity, Innovation, and Entrepreneurship Working Groups Innovation Policy Urban Economics Conferences NBER Entrepreneurship and Innovation Policy and the Economy Meeting, Spring 2022 More from NBER In addition to working papers, the NBER disseminates affiliates' latest findings through a range of free periodicals -- the NBER Reporter, the NBER Digest, the Bulletin on Retirement and Disability, the Bulletin on Health, and the Bulletin on Entrepreneurship -- as well as online conference reports, video lectures, and interviews. Gita Gopinath The 2022 Martin Feldstein Lecture: Managing a Turn in the Global Financial Cycle Primary tabs The 2022 Martin Feldstein Lecture: Managing a Turn in the Global Financial Cycle * Lecture Gita Gopinath, the first deputy managing director of the International Monetary Fund, delivered the 2022 Martin... 2021_NobelPrizewinners_Angrist_Card_Imbens Joshua Angrist, David Card, and Guido Imbens Awarded 2021 Nobel Prize * Article Long-time NBER research associates Joshua Angrist, David Card, and Guido Imbens have been awarded the 2021 Nobel Prize in Economic Sciences in recognition of... 2021methodslecture.jpg Summer Institute 2021 Methods Lectures: Causal Inference Using Synthetic Controls and Regression Discontinuity Designs * Lecture The credible estimation of causal effects is a central task of applied econometrics. Two tools for this purpose that... Follow * * * * National Bureau of Economic Research Contact Us 1050 Massachusetts Avenue Cambridge, MA 02138 617-868-3900 info@nber.org webaccessibility@nber.org * Homepage * Privacy Policy * Accessibility Policy (c) 2022 National Bureau of Economic Research. All Rights Reserved.