The university and the economy: An exploratory analysis of the impact of current economic activity of the University of Minnesota on the economy of the state.

다국어 초록 (Multilingual Abstract)

This dissertation examines the economic impact of a post secondary institution. The central reason for this study is public policy concerns. All post secondary institutions receive public funding, directly through cash grants and indirectly through student aid, and the impact of these institutions on the state's economy must concern public policy makers.
An institution impacts the economy in three central ways; through current spending on compensation and goods and services, developing human capital that leads to higher lifetime incomes for students, and creating and disseminating new knowledge that improves economic productivity and leads to new goods and services. An adequate examination of the economic impact requires a careful construction of a conceptual model that includes all three ways.
There are two important economic concepts not always considered in these studies in the literature. The first is that economic activity may be attributable to an institution, but this activity may not be totally new to the state. Internally generated resources simply shift activity from another location or industry in the state to the institution. On the other hand, new resources brought into the state by non-resident students, federal grants, and other related means create new activity. The second is the adequate measurement of dynamic relationships in the economy. Regional economists have developed sophisticated tools to measure changes in labor markets, wage rates and income, inter-industry relationships, and population due to new spending. An economic model that ignores these relationships will inaccurately estimate the impact of the institution and result in misleading conclusions.
The conceptual model is applied to the University of Minnesota. However, the paper only presents an empirical measure of the economic impact from current economic activity. Economic activity attributable to the University of Minnesota is initially about 2% of the state total, but this drops to about 1.5% over a decade as the economy responds to new spending levels. The new activity created by the University through new resources brought into the state is only about one-third this level. For technical reasons related to import substitution this latter figure should be considered a lower bound.