Demographics and Innovation
81 Pages Posted: 29 Nov 2017 Last revised: 9 Feb 2018
Date Written: February 9, 2018
Younger labor forces produce more innovation. We establish this using the native born labor force projected based on local historical births in the U.S. We use three successive levels of analysis – commuting zones, firms, and inventors – to eliminate or examine effects such as firm and inventor life cycles. We also find that innovation activities reflect the innovative characteristics of younger labor forces, and firms in younger labor markets have higher valuations. Our results indicate that younger people as a group – inventors interacting with non-inventors – produce more innovation through the labor supply channel rather than through a financing supply or consumer demand channel.
Keywords: Innovation; Demographics; Age structure; Labor markets; Firms; Inventors; Patents
JEL Classification: G31, J11, J13, J21, J24, O31, O32, O33, O34
Suggested Citation: Suggested Citation