Labor Force Demographics and Corporate Innovation

78 Pages Posted: 29 Nov 2017 Last revised: 25 Jun 2018

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 - Schulich School of Business

Date Written: June 22, 2018

Abstract

Firms in younger labor markets produce more innovation. We establish this using the local labor force projected based on historical births in each local labor market in the United States. Successive analyses of labor markets, firms, and inventors allow us to separate out effects such as firm and inventor life cycles. Corporate innovation activities reflect the innovative characteristics of younger labor forces. Additionally, firms in younger labor markets have higher valuations. Younger people 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 (June 22, 2018). 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 - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

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