The placement of new PhDs in industry provides one mechanism for transmitting tacit knowledge from universities to industry. This paper analyzes data concerning the placements of new PhDs who had definite plans to go to work in industry for the period 1997-2002. Data come from the Survey of Earned Doctorates overseen by the National Science Foundation. We find knowledge sources to be heavily concentrated in certain regions and states. Moreover, the geographic distribution of knowledge sources, as measured by where PhDs going to work in industry are trained, is different than other measures of knowledge sources would suggest, such as university R&D-expenditure data. A major headline is the strong role played by Midwestern universities, which educate over 26.5 percent of all PhDs going to industry but are responsible for only 21.1 percent of university R&D. We find that only 37 percent of PhDs trained in S&E stay in their state of training. Stay patterns are particularly low among certain Midwestern states, many of whose students leave the state for employment on the coasts. One can make the case that as the traditional industrial base of the United States shifts, a highly trained workforce will only be maintained if the Federal government increasingly steps in to provide financial support for graduate education, since state legislatures are unlikely to continue to fund migration flows from public institutions. Firms most likely to hire new PhDs are found in computer and electrical products, followed by firms working in publishing and professional, scientific and technical services. The hiring data highlights the role that PhDs play in local economic development. Almost one out of ten new PhDs going to work for industry heads to San Jose; 58 percent go to work in one of 20 cities. The placement data also suggest that small firms play a larger role in innovation than R&D expenditure data would suggest.
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