Innovation, Cities, and New Work

Abstract

Where does adaptation to innovation take place? The supply of educated workers and local industry structure matter for the subsequent location of new work - that is, new types of labor-market activities that closely follow innovation. Using census 2000 microdata, the author shows that regions with more college graduates and a more diverse industrial base in 1990 are more likely to attract these new activities. Across metropolitan areas, initial college share and industrial diversity account for 50% and 20%, respectively, of the variation in selection into new work unexplained by worker characteristics. He uses a novel measure of innovation output based on new activities identified in decennial revisions to the U.S. occupation classification system. New work follows innovation, but unlike patents, it also represents subsequent adaptations by production and labor to new technologies. Further, workers in new activities are more skilled, consistent with skill-biased technical change.

Keywords: Innovation, adaptation, agglomeration, occupations, human capital, industrial diversity

JEL Classification: J24, O33, R12, R23