Are Elite Universities Losing Their Competitive Edge?

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Advances in information technology over the last three decades have greatly diminished the importance of physical proximity.

For centuries, physical access to other researchers has facilitated all forms of knowledge-based production. Universities occupy physical campuses, and residence at an elite university in close proximity to other scholars has long been thought to increase research productivity.

Nonetheless, the future may be different. In Are Elite Universities Losing Their Competitive Edge? (NBER Working Paper No. 12245) co-authors E. Han Kim, Adair Morse, and Luigi Zingales conclude that advances in information technology over the last three decades have greatly diminished the importance of physical proximity. As a result, academics now are less attracted to universities with highly productive faculty members. These conclusions are based on career information for 1970 to 2001 for all individuals in economics or finance who have ever had either a tenure track or visiting position in any of a list of 25 leading universities. Four measures of research productivity -- number of articles written, published pages, citations, and impact-weighted page counts -- were calculated for each individual. To isolate the effect of university residence, the authors control for individual differences in average productivity, experience and professorial rank, over all faculty quality, the presence of non-productive colleagues, the quality of the Ph.D. program, whether the school is a state school, the average annual snowfall, and the distance to the closest metropolitan city.

In general, the measures used in the article suggest that although professorial research productivity declines with age and experience, a faculty member who moved to Harvard from a school not on the top-25 list in the 1970s could expect to almost double his research productivity. At the time, research productivity would have increased by moving to any of 17 of the schools on the top-25 list of economics departments. By the 1990s, the effect of moving to a top economics department had declined. Only two schools out of the 25 were likely to increase an individual's productivity. While knowledge spillovers have declined, cultural norms still seem to matter. The authors conclude that the "bad influence of non-productive colleagues seems to extend well beyond the opportunity cost of positions occupied by unproductive employees."

Kim, Morse, and Zingales also reason that the benefits of physical proximity may have allowed the best schools to offer somewhat lower salaries. As improving communications from 1970 to 2000 eroded the benefits of physical proximity, salaries at elite universities might have been expected to rise, because those schools no longer could retain faculty simply by offering more interaction with better colleagues. The salary data from 1968 to 2000 seem to support this, suggesting that that "elite universities are no longer able to retain star faculty on the strength of their reputation alone. Upcoming universities now compete on a more level playing field to attract productive faculty.

-- Linda Gorman