The effect on science of government cuts to doctoral scholarships*

The ‘there are too many PhDs’ debate lacks evidence on the consequences of reducing the number of PhDs. This paper provides causal estimates of the impact on STEM students of cuts to government-funded PhD scholarships based on a unique quasi-natural experiment. I use data on the staggered cuts made by the Hungarian Government between 2010 and 2021 to expand Orbàn’s political influence over the university system. The political aim of these cuts ensures that they are exogenous to the economic cycle and universities’ evolution. The analysis uses the enrolment records of all doctoral students in Hungary and employs a generalized difference-in-differences approach. The results show that a severe cut to PhD scholarships increases the chance of PhD completion by 1 percentage point (pp) but that this positive effect is countered by a persistent and growing reduction in female and first-generation student entry rates. This suggests that while they might result in improved training and/or a more efficient education system, cuts to scholarships will come at the expense of inclusion. Additionally, the findings indicate that the negative impact on scientific production is temporary, with doctoral student productivity decreasing by 2pp and the quality of scientific output declining by 0.2–1pp. My results highlight these tradeoffs. Cuts to funding that reduce the numbers of PhD scholarships might increase efficiency in terms of student attainment but are likely to reduce inclusion, scientific production, and research quality.