Abstract The U.S. National Institutes of Health (NIH) budget expansion from 1998 through 2003 increased demand for biomedical research, raising relative wages and total employment in the market for biomedical scientists. However, because research doctorates in biomedical sciences can often take six years or more to complete, the full labor supply response to such changes in market conditions is not immediate, but rather is observed over a period of several years. Economic rational expectations models assume that prospective students anticipate these future changes, and also that students take into account the opportunity costs of their pursuing graduate training. Prior empirical research on student enrollment and degree completions in science and engineering (S&E) fields indicates that “cobweb” expectations prevail: that is, at least in theory, prospective graduate students respond to contemporaneous changes in market wages and employment, but do not forecast further changes that will arise by the time they complete their degrees and enter the labor market. In this article, we analyze time-series data on wages and employment of biomedical scientists versus alternative careers, on completions of S&E bachelor's degrees and biomedical sciences PhDs, and on research expenditures funded both by NIH and by biopharmaceutical firms, to examine the responsiveness of the biomedical sciences labor supply to changes in market conditions. Consistent with previous studies, we find that enrollments and completions in biomedical sciences PhD programs are responsive to market conditions at the time of students' enrollment. More striking, however, is the close correspondence between graduate student enrollments and completions, and changes in availability of NIH-funded traineeships, fellowships, and research assistantships.