American Economic Journal:
Applied Economics
ISSN 1945-7782 (Print) | ISSN 1945-7790 (Online)
The Returns to Physical Capital in Knowledge Production: Evidence from Lab Disasters
American Economic Journal: Applied Economics
(pp. 248–85)
Abstract
We investigate the nature and relevance of physical capital in knowledge production. Exploiting adverse events in research laboratories, we find that scientists experience a persistent reduction in research output if they lose specialized physical capital—equipment and material they created over time for a particular research purpose. In contrast, they recover in productivity if they only lose generic physical capital. Scientists in older laboratories, who presumably lose more obsolete physical capital, are more likely to change their research direction and recover. These findings suggest that scientists' investments into their own physical capital yield lasting returns but also create path dependence.Citation
Baruffaldi, Stefano, and Fabian Gaessler. 2026. "The Returns to Physical Capital in Knowledge Production: Evidence from Lab Disasters." American Economic Journal: Applied Economics 18 (1): 248–85. DOI: 10.1257/app.20220629Additional Materials
JEL Classification
- D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- E22 Investment; Capital; Intangible Capital; Capacity
- G31 Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
- I23 Higher Education; Research Institutions
- O31 Innovation and Invention: Processes and Incentives