Human Resources and Innovation: Total Factor Productivity and Foreign Human Capital

41 Pages Posted: 17 Jul 2015

See all articles by Claudio Fassio

Claudio Fassio

CIRCLE (Centre for Innovation, Research and Competence in the Learning Economy), University of Lund

Sona Kalantaryan

European University Institute

Alessandra Venturini

University of Turin - Department of Economics; IZA Institute of Labor Economics; European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS)

Multiple version iconThere are 2 versions of this paper

Date Written: June 2015

Abstract

The objective of this paper is to analyse the role of migrants in innovation in Europe. We use Total Factor Productivity as a measure of innovation and focus on the three largest European countries – France, Germany and the United Kingdom – in the years 1994-2007. Unlike previous research, which mainly employs a regional approach, we analyse the link between migration and innovation at the sectoral level. This allows us to measure the direct contribution of migrants in the sector in which they are actually employed. Moreover, it allows a distinction between the real contribution of migrants to innovation from possible inter-sectoral complementarities, which might as well foster innovation. We control for the different components of human-capital, such as age, education and diversity of origin. To address the possible endogeneity of migration we draw on an instrumental variable strategy originally devised by Card (2001) and adapt it at the sector level The results show that overall migrants are relevant in all sectors, but some important differences emerge across sectors: highly-educated migrants show a larger positive effect in the high-tech sectors, while middle- and low-educated ones are more relevant in manufacturing. The diversity of countries of origin contributes to innovation only in the services sectors, confirming that in empirical analyses at the regional or national level the diversity measure might capture the complementarity between sectors rather than the contribution of different national skills. This implies that the diversity should not guide the migration policy which instead should be linked to the specific demand for labour of firms and not to pursue a generic search for highly skilled migrants.

Keywords: Migration, innovation, highly skilled migrants, low skilled migrants, Total Factor Productivity

JEL Classification: F22, F66, O31, O32

Suggested Citation

Fassio, Claudio and Kalantaryan, Sona and Venturini, Alessandra, Human Resources and Innovation: Total Factor Productivity and Foreign Human Capital (June 2015). Robert Schuman Centre for Advanced Studies Research Paper No. RSCAS 2015/43. Available at SSRN: https://ssrn.com/abstract=2631086 or http://dx.doi.org/10.2139/ssrn.2631086

Claudio Fassio (Contact Author)

CIRCLE (Centre for Innovation, Research and Competence in the Learning Economy), University of Lund ( email )

Box 117
Lund, S221 00
Sweden

Sona Kalantaryan

European University Institute ( email )

Fiesole, Tuscany
Italy

Alessandra Venturini

University of Turin - Department of Economics ( email )

Via Po, 53
Torino, 10124
Italy

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS) ( email )

Villa La Fonte, via delle Fontanelle 18
50016 San Domenico di Fiesole
Florence, Florence 50014
Italy

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