ARE GRADUATE STUDENTS RATIONAL? MACROECONOMIC DETERMINANTS OF GRADUATE ENROLLMENT AND COMPLETIONS IN THE BIOMEDICAL SCIENCES
The National Institutes of Health (NIH) budget doubling from 1998 through 2003 stimulated demand for biomedical scientists, increasing both relative wages and employment. However, because research doctorates in these fields may take six years or more to complete, there is a substantial lag in the labor supply response to changing market conditions. Rational expectations models assume that prospective graduate students can forecast their expected future wages, taking into account other students likely responses and thus also future employment levels. However, prior research on student enrollment and degree completion in science and engineering fields suggests that market conditions at the time of enrollment are taken as proxies for future conditions. Previous studies also suggest that graduate student enrollment and PhD completions may be responsive to changes in availability and mechanism of financial support. This thesis uses instrumental variables estimation on time-series data including biomedical scientists' wages and employment, bachelor's degrees and PhD completions, and NIH and private industry research funding, to examine responsiveness of labor supply to changing market conditions, and particularly to changes in NIH funding levels. We find that graduate student enrollment and PhD completions are highly responsive to NIH financial support, to current trends in job availability at time of enrollment, and to expected earnings.
Biomedical, Science, Graduate, Funding, National Institutes of Health, NIH, Labor, Education, Labor Economics, Cobweb, Rational Expectations
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