Labor Force Demographics and Corporate Innovation

70 Pages Posted: 29 Nov 2017 Last revised: 4 May 2020

See all articles by François Derrien

François Derrien

HEC Paris - Finance Department

Ambrus Kecskes

York University - Schulich School of Business

Phuong-Anh Nguyen

York University

Date Written: May 2, 2020

Abstract

Firms in younger labor markets produce more innovation. We establish this by instrumenting the current labor force with historical births in each local labor market in the United States. Analyses of firms and inventors allow us to rule out unobservable heterogeneity across local labor markets and firms, life cycles, and other effects. Corporate innovation in younger labor markets reflects the innovative characteristics of younger labor forces and has greater market value. Younger workers as a group – inventors interacting with non-inventors – produce more innovation for firms through the labor supply channel rather than through a financing supply or consumer demand channel.

Keywords: Innovation; Demographics; Labor markets; Inventors; Firm value

JEL Classification: G31, J11, J21, O31

Suggested Citation

Derrien, François and Kecskes, Ambrus and Nguyen, Phuong-Anh, Labor Force Demographics and Corporate Innovation (May 2, 2020). HEC Paris Research Paper No. FIN-2017-1243. Available at SSRN: https://ssrn.com/abstract=3076971 or http://dx.doi.org/10.2139/ssrn.3076971

François Derrien

HEC Paris - Finance Department ( email )

1 rue de la Liberation
Jouy-en-Josas Cedex, 78351
France
33 1 39 67 72 98 (Phone)

HOME PAGE: http://www.hec.fr/derrien

Ambrus Kecskes (Contact Author)

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

Phuong-Anh Nguyen

York University

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

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