Federal research funding is a key input into scientific work, but funding streams can be disrupted. We study how delays in renewed NIH research grants affect lab personnel’s careers, linking grant records to university payroll, tax, Census, and publication data. Using a difference-in-differences design, we find that interruptions of at least 30 days increase nonemployment among personnel in labs supported by a single NIH R01 grant by 3 percentage points, or 40%. Among those who remain employed in the US, earnings decrease by 20%. The results show that short funding gaps can alter career trajectories, especially for trainees.

This article studies how federal funding affects the innovation outputs of university researchers. We link person-level research grants from 22 universities to patents, publications, and career outcomes from the U.S. Census Bureau. We focus on the effects of large, idiosyncratic, and temporary cuts to federal funding in a researcher’s preexisting narrow field of study. Using an event study design, we document that these negative federal funding shocks reduce high-tech entrepreneurship and publications but increase patenting. The lost publications tend to be higher quality and more basic, whereas the additional patents tend to be lower quality, less general, and more often privately assigned. These federal funding cuts lead to an increase in private funding, which partially compensates for the decline in federal funding. Together with evidence from industry-university contracts, the results suggest that federal funding cuts shift university research funding from federal to private sources and lead to innovation outputs that are less openly accessible and more often appropriated by corporate funders.