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Regardless of their jobs, scientists and engineers increase employers’ productivity

June 21, 2018

The conclusion from the working paper, The Effects of Scientists and Engineers on Productivity and Earnings at the Establishment Where They Work, by Erling Barth, James C. Davis, Richard B. Freeman, and Andrew J. Wang, is pretty clear for manufacturers and policy advocates for improving U.S. manufacturing: firms should hire as many scientists and engineers as possible.  The research finds, Morgan Foy explains in an NBER Digest article, that occupational statistics reveal approximately 80 percent of people trained as scientists and engineers do not work in R&D jobs.  Filling a company’s payroll with as many of these people, regardless of their position, seems to pay off. The authors’ research concluded a 10 percent increase in the proportion of scientist and engineer employment within a manufacturing establishment was associated with a 4 percent increase in total factor productivity for the firm.

Increased concentration of scientists and engineers in a firm is also good news for the employees’ paychecks. Foy points out the research found a worker shifting their employment to a company with a 10 percentage point higher scientist and engineer proportion can yield 2 percent higher earnings.

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