Labor Force Demographics and Corporate Innovation

HEC Paris Research Paper No. FIN-2017-1243

Review of Financial Studies, Forthcoming

96 Pages Posted: 29 Nov 2017 Last revised: 28 Aug 2022

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: August 28, 2022

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 its market value is higher. Younger workers as a group, not merely inventors by themselves, produce more innovation for firms through the labor force channel rather than through a financing or consumption 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 (August 28, 2022). HEC Paris Research Paper No. FIN-2017-1243, Review of Financial Studies, Forthcoming, 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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