1. Should the government subsidise supply or demand in the market for scientists and engineers? Carlos Chambel Hugo Valente Pedro Nazareth Paul M. Romer – Working Paper 7723 (NBER) S & T Policy MSc in Engineering Policy and Management of Technology

2. Should the government subsidise supply or demand in the market for scientists and engineers? This paper suggests : The innovation policy in the US has erred. The existing institutional arrangements in higher education limit supply. Specific programs that could increase supply.

3. Should the government subsidise supply or demand in the market for scientists and engineers? Why is the innovation policy so important? Contributes for the technological progress Increases the trend rate of growth output Increases the standards of living and wealth

4. Should the government subsidise supply or demand in the market for scientists and engineers? US income per capita = 1.8% / year Britain income per capita = 1.3% / year Sweden income per capita = 3% / year

5. Should the government subsidise supply or demand in the market for scientists and engineers? M. Sc. Engineering Policy and Technology Management E = N * W Tax advantages, credit, cash payments… … an additional dollar in subsidies does not translate into much additional private spending on R&D People are not the only input ! Subsidy for purchase eqp used in R&D would be less costly than one that is based on total expenditures including salaries! The demand / supply equilibrium

6. Should the government subsidise supply or demand in the market for scientists and engineers? Where have the scientists gone? Despite increased spending on research and development the USA is producing fewer and fewer scientists!

7. Should the government subsidise supply or demand in the market for scientists and engineers? The supply system 30%-40%

8. Should the government subsidise supply or demand in the market for scientists and engineers? The supply of Undergraduate Degrees Educational institutions provide too little information about prospective benefits of being scientists. Undergraduate institutions make getting an engineer degree harder, because they cannot expand their engineering departments due to university politics. Because of this, only half of aspiring engineers attain a degree.

9. Should the government subsidise supply or demand in the market for scientists and engineers? The supply of Ph.D. Degrees in Science & Engineering The fact: The supply increase in the 1990s of Ph.D. degrees in Science & Engineering has been accompanied by generally declining job prospects for degree recipients -It helps to explain why undergraduate students did not pursue degrees in some sciences (e.g. Natural Sciences) -Still, the need to explain the absence of an increase in undergraduate degrees in engineering or other sciences where job prospects for Ph.D. have remained strong The Critical Issue: The need to understand the market for Ph.D. in order to formulate policies concerning the supply of scientist & engineers (independently of its influence on undergraduate programs)

10. Should the government subsidise supply or demand in the market for scientists and engineers? The Market: A major part of the graduated flow… The Challenge: Increase the Ph.D. students fraction that can put their skills to work in the private sector -During the 1980s the number of Ph.D. recipients (supply) in the U.S. increased -Most of the students planned to pursue academic research appointments, but the number of people holding faculty positions remained roughly constant Increased Ph.D. subsidizing contributed for a steadily worsening academic job prospects

11. Should the government subsidise supply or demand in the market for scientists and engineers? An interpretation of the evidence: -Undergraduate inst. are a critical bottleneck in the training of scientists & engineers MSc. in engineering have shown steadily growth while undergraduate programs have not) -Selection method that attracts people with this taste in Ph.D. -Ph.D. training that cultivates this taste (or both) -Graduate schools produce people trained only for employment in academic inst. as a side effect of the production of basic research results Evidence about Ph.D. preferences for engaging in activities in science despite salary reduction -Information concerning quality of education and job prospects -Some internal aspects of the inst. (different departments revenues might promote graduate instead of undergraduate training

12. Should the government subsidise supply or demand in the market for scientists and engineers? Discussion -Situation in Portugal: NSE versus non NSE (particularly case of private education increasing). -Job prospects for the Portuguese Graduate students: Is the share graduate students in academic jobs increasing? Is this according with the Portuguese growth policy? Learning from the US experience: