We introduce a model of the admissions process based upon standard agency theory and explore its implications with economics PhD admissions data from 2013-2019. We show that a subjective score that aggregates subjective ratings and recommendation letter features plays a more important role in determining admissions than an objective score based upon graduate record exam (GRE) scores. Subjective evaluations by references who write multiple letters are not only more influential than those of references who write one letter, but they are also more informative. Since multiple-letter references are also more highly ranked economists, this implies that there is a constraint on the supply of high-quality references. Moreover, we find that both the subjective and objective scores are correlated with job placement at a top economics department after the completion of the PhD. These indicators of individual achievement have a smaller effect than an undergraduate degree from an Ivy Plus school (i.e., Ivy League + Stanford, MIT, Duke, and Chicago). In the self-selected pool of applicants, Ivy Plus graduates are twice as likely to be admitted to a top 10 graduate program and are much more likely to obtain an assistant professor position at a top 10 program upon PhD completion. Given that Ivy Plus students must pass a stringent selection process to gain admission to their undergraduate program, we cannot reject the hypothesis that admission committees use information efficiently and fairly. However, this also implies that there may be a return to attending a selective undergraduate program in order to be pooled with highly skilled individuals.

This paper examines how government funding programs geared towards early-stage companies interact with private capital markets. Using hand-collected data on 755 government programs worldwide, we find that governments' allocations to such funding programs have been comparable to global venture capital disbursements in the past decade. Government programs were more frequent in periods with more private venture activity, a relationship that was stronger in nations with better public governance. The programs' structures often relied on the local private sector. The private sector's involvement was greater when government programs targeted earlier-stage companies and when rankings of government effectiveness were higher. We find that such government funding programs increased local innovation, particularly when the programs focused on early-stage ventures or collaborated with the private sector. These findings are most consistent with the explanation that the reliance on private capital markets enabled governments to mitigate investment frictions and improve capital allocation.

This paper examines the interaction between governments and private capital investors when financing early-stage ventures. We first provide a simple conceptual framework to explore when collaboration between governments and private investors is likely to emerge. Using hand-collected data on 755 programs worldwide, we find that government programs frequently involve private capital investors. Collaboration is greater when governments are more effective, when programs target earlier-stage companies, and when the local private venture market is more developed. Such collaborations mostly occur through joint equity investments and matching-funds requirements. These findings underscore the importance of government synergies with local private capital markets.

This paper examines the interaction between governments and private capital investors when financing early-stage ventures. We first provide a simple conceptual framework to explore when collaboration between governments and private investors is likely to emerge. Using hand-collected data on 755 programs worldwide, we find that government programs frequently involve private capital investors. Collaboration is greater when governments are more effective, when programs target earlier-stage companies, and when the local private venture market is more developed. Such collaborations mostly occur through joint equity investments and matching-funds requirements. These findings underscore the importance of government synergies with local private capital markets.