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Jerry Conover
Indiana Business Research Center

Tim Slaper
Indiana Business Research Center

Ryan Piurek
University Communications

Last modified: Tuesday, May 19, 2009

With large economic footprint, IU makes vital impact on state, study says

May 19, 2009

BLOOMINGTON, Ind. -- Indiana University continues to lead all public and private institutions in the state of Indiana in granting baccalaureate and most graduate degrees, and a new study indicates that IU graduates are making vital contributions to the state well after they receive their degrees.

An estimated 81 percent of Indiana residents who graduated from IU between 2002 and 2005 still lived in Indiana at the start of 2008, according to an economic impact study conducted by the Indiana Business Research Center at IU's Kelley School of Business.

Through its contribution to human capital in Indiana, along with spending associated with its core missions of education and research, the civic engagement of its students and staff, and its campuses' cultural offerings, Indiana University makes a major impact on Indiana's economic health, the study reports. The total "economic footprint" of IU on the state amounts to $4.6 billion annually, and this economic activity generates approximately $187 million in state and local taxes, according to the study.

"While IU's degree output comes as no surprise, we were pleased to find that so many of the university's graduates are choosing to apply the skills they've acquired here in Indiana," said Jerry Conover, director of the IBRC. "Clearly, the settlement patterns of IU alumni have a significant impact on economic development in Indiana and Hoosiers' quality of life. And, based on the characteristics of IU's student body, we also know the university's graduates are inclined toward giving back to their communities through volunteer work and charitable donations."

In terms of its overall economic impact, IU sizes up favorably with the state's major employers. IU employs 16,320 faculty and staff, approximately the same number of Hoosiers who work in medical equipment and supplies manufacturing. Their spending -- together with student expenditures and university purchases of goods and services -- supports an additional 36,000 jobs stateside, according to study estimates.

The Indiana University Impact Study also measures the economic benefits of IU's civic contributions, a value estimated at nearly $16 million. Estimates for IU's civic engagement were based on an extensive student and staff survey that collected data on a range of topics including spending patterns, volunteer and service-learning activities and charitable contributions.

To determine IU's economic footprint, the study examined the employment and economic significance of spending by the university, students and visitors. Its estimates consider the effects of such direct expenditures as university purchases and compensation of faculty and staff as well as the "ripple effects" of these expenditures within the community.

The study divides IU's impact into "core" and "collateral" benefits. Core benefits, which relate to the university's core mission of providing excellence in education and research, highlight characteristics of IU students, as well as the number and type of degrees conferred, settlement patterns of recent graduates and the amount of research funding IU attracts. This information is useful in indicating whether IU students apply their skills in the state after graduation, whether IU curriculum supports the state's economic development priorities, including those in the life sciences, and whether IU research and development generates private-sector commerce.

Collateral benefits of IU recognize the effects that university expenditures and student and staff activities have on quality of life in the local community.

Other key findings of the study include:

  • IU led all Indiana public and private institutions in granting four-year degrees and most graduate degrees conferred in 2002 to 2007. Among the 76 institutions across the state that granted baccalaureate or higher degrees during this time, IU granted 29 percent of baccalaureate degrees, 35 percent of master's degrees, over half of all professional degrees and almost one-third of doctoral degrees.
  • IU plays a major role in educating the current and future generations of the state's professionals, including business and government leaders, scientists and educators. Compared with all institutions in Indiana, IU produced a quarter or more of all baccalaureate and advanced graduates in the five most popular degree fields -- business (26 percent), education (36 percent), health and life sciences (37 percent), social sciences (27 percent) and the humanities and performing arts (33 percent). In addition, IU conferred well over half of all law and human services degrees in the state at the baccalaureate level or higher.
  • IU awarded 13,003 life sciences degrees from 2002 to 2007, almost half of such degrees awarded by Indiana's four-year public universities.
  • IU graduates can expect to earn significantly more than individuals with a two-year associate's degree. The typical male IU graduate can expect to earn $1.8 million over his lifetime and the typical female graduate can anticipate $1.3 million in lifetime earnings. These figures are 41 percent and 33 percent greater, respectively, than the expected lifetime earnings of male and female associate's degree recipients.
  • IU averaged $256.8 million in annual research expenditures supported by external contracts and grants in fiscal years 2006 through 2008.
  • Between 2003 and 2007, IU research generated 777 new invention disclosures, 390 new patent applications and 128 new patents issued.
  • IU students and employees donated an estimated $16 million to charity during the 2006-07 academic year, of which more than $10 million went to organizations operating within their campus regions.
  • IU enriches the state through its community engagement programs, cultural offerings and service centers. Hoosiers benefit from access to the world-class Jacobs School of Music, as well as IU's art galleries, libraries and recreational facilities.

The study was undertaken to measure how the lives of Hoosiers are improved by IU, and the report presents policymakers, university officials and Indiana taxpayers with comprehensive yet conservative estimates of the university's impact. It includes reports for the entire IU system as well as for each of the university's eight campuses; these reports are available at

The study uses traditional input-output analysis to reveal economic activity related to IU's operating budget and student spending. The monetary value of student service-learning and volunteering is also added into the total of collateral benefits and the value of faculty and staff civil engagement is also measured. Conover noted that "an important element of the study is its methodological rigor. Many university impact studies have relied on shaky assumptions that magnify an institution's apparent impact. The conservative approach of our analysis made a giant leap toward the rigor of a peer-reviewed article in an effort to more realistically reflect the university's real impacts."

Established in 1925, the Indiana Business Research Center provides and interprets economic information needed by the state's business, government and nonprofit organizations, as well as users of such information throughout the nation. The IBRC maintains databases on numerous topics such as employment, taxes, income, economic activity, education, demographics and a host of other economic indicators for the nation, the state and local areas. In addition, the center conducts original research to generate needed information when existing data are not available or sufficient.