Do US Congressional earmarks increase research output at universities?

For 20 years US universities have been able to bypass peer-reviewed research competition for federal funding and seek a direct appropriation of funding from Congress. Proponents of this earmarking claim it helps a university to build the infrastructure needed to be able to compete for peer-reviewed funding. Opponents claim this funding is used poorly and is less productive than peer-reviewed funding. Using two panel data sets that span 1980 to 1998, incorporating university and year fixed effects, and using an instrumental variables estimation, this paper shows that while the number of articles published increases, the number of citations per article decreases. In general, the study suggests that earmarked funding may increase the quantity of publications but may decrease their quality.