Economic Effects of Universities

28.09.2022

"Public Spending Pays for Itself in a Relatively Short Period of Time"

On September 27, 2022, WIFO economist Jürgen Janger presented the results of the study "Economic and Societal Effects of Universities" together with the President of the Austrian University Conference Sabine Seidler and Science Minister Martin Polaschek at the Presseclub Concordia in Vienna.

Federal spending on universities increased by a quarter to €3.5 billion between 2015 and 2020. An update of a 2017 WIFO study on the economic and societal effects of public universities continues to show high economic effects of the services financed with these expenditures, for graduates, companies, the public sector and society as a whole. Public and private financial returns are clearly positive - the public (€3.9 billion in tax revenues) alone due to demand-side effects resulting from university operations.

However, the demand-side effects of universities should be seen as the tip of an iceberg: The really significant effects, such as the long-term productivity effects of knowledge production and transfer, occur in addition to the aforementioned figures, thus turning the return on public funds much more positive. University research and education account for about 10% of annual real GDP growth. The public return on investment in higher education, calculated from the difference between the cost of universities and colleges and the government revenue returned via taxes on the higher incomes of graduates, is over 7% for men and 5% for women, far above reference interest rates for safe investments (federal bonds are at 0.3%). 81% of all companies cooperating with higher education institutions introduce market novelties - i.e. innovations with a high degree of novelty.

Budget expenditures by the state for universities can thus be regarded as investments that generate more tax revenues in the short to medium term (3 to 5 years) than the initial investments required in terms of tax revenues.

Publications

Study by: Austrian Institute of Economic Research
Commissioned by: Universities Austria
Online since: 27.09.2022 11:00
 
Universitäten sind zentrale Institutionen in wissensbasierten Gesellschaften. Ihre Aktivitäten ziehen vielfältige wirtschaftliche und gesellschaftliche Effekte nach sich. Die vorliegende Studie aktualisiert universitäre Effekte für Innovation, Arbeitsmarkt und Wirtschaft auf Basis der vorangegangenen WIFO-Studie aus dem Jahr 2017. Schon die Steuereinnahmen, die sich aus dem Betrieb der Universitäten ergeben – etwa durch Personalausgaben – sind kurz- bis mittelfristig höher als die Bundesmittel für Universitäten. Die Betriebseffekte der Universitäten sind jedoch als Spitze eines Eisbergs zu betrachten: Die wirklich wesentlichen Effekte wie die langfristigen Produktivitätseffekte über Wissensproduktion und -vermittlung entstehen zusätzlich zu den Betriebseffekten, lassen also den Ertrag öffentlicher Mittel noch viel deutlicher in den positiven Bereich ansteigen.
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Mag. Dr. Jürgen Janger, MSc

Research groups: Industrial, Innovation and International Economics
© BKA/Florian Schrötter
© BKA/Florian Schrötter