The nexus between labor diversity and firm's innovation

TitleThe nexus between labor diversity and firm's innovation
Publication TypeJournal Article
Year of Publication2014
AuthorsParrotta, P, Pozzoli, D, Pytlikova, M
JournalJournal of Population Economics
Keywordsethnic diversity, extensive and intensive margins, labor diversity, patenting activity

In this paper we investigate the nexus between firm labor diversity and innovation using data on patent applications filed by firms at the European Patent Office and a linked employer-employee database from Denmark. Exploiting the information retrieved from these comprehensive data sets and implementing proper instrumental variable strategies, we estimate the contribution of workers' diversity in cultural background, education and demographic characteristics to valuable firm's innovation activity. Specifically, we find evidence supporting the hypothesis that ethnic diversity may facilitate firms' patenting activity in several ways by: (a) increasing the propensity to (apply for a) patent, (b) increasing the overall number of patent applications and (c) by enlarging the breadth of patenting technological fields, conditional on patenting. Several robustness checks corroborate the main findings.

Refereed DesignationRefereed