Marshall meets Bartik: Revisiting the mysteries of the trade
TLDR
Top inventor inflows causally boost local patent productivity, demonstrating knowledge spillovers and distortion by state tax differences.
Key contributions
- Top inventor inflows causally increase local patent productivity.
- Knowledge spillovers extend beyond firm boundaries and co-inventor networks.
- Confirms knowledge as a partially nonexcludable good in a spatial economy.
- State tax differences significantly distort the spatial distribution of inventive activity.
Why it matters
This paper reveals how top inventor inflows causally boost local innovation, demonstrating that knowledge spillovers extend beyond organizational boundaries. It highlights the "in the air" nature of knowledge and the significant distortion of inventive activity by state tax differences, offering key insights for regional development and tax policy.
Original Abstract
We identify a causal effect of top inventor inflows on the patent productivity of local inventors by combining the idea-generating process described by Marshall (1890) with the Bartik (1991) instruments involving the state taxes and commuting zone characteristics of the United States. We find that local productivity gains go beyond organizational boundaries and co-inventor relationships, which implies the partially nonexcludable good nature of knowledge in a spatial economy and pertains to the mysteries of the trade in the air. Our counterfactual experiment suggests that the spatial distribution of inventive activity is substantially distorted by the presence of state tax differences.
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