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Department of Economics, Aarhus School of Business, University of Aarhus Working Papers, Department of Economics, Aarhus School of Business, University of Aarhus

No 10-15:
The Nexus between Labor Diversity and Firmīs Innovation

Pierpaolo Parrotta (), Dario Pozzoli () and Mariola Pytlikova ()

Abstract: This paper investigates the nexus between labor diversity and innovation in a population of Danish rms. Specically, exploiting information retrieved from a comprehensive linked employer-employee database and implementing a proper instrumental variable strategy, we are able to identify the contribution of diversity in cultural background, skills and demographic characteristics to valuable rm's innovation activity. The latter is measured by: (1) the rm's propensity to apply for a patent, (2) the number of patent applications (intensive margin) and (3) the rm's ability to patent in dierent technological areas (extensive margin). We nd that skill diversity plays a key role in propelling rm's innovation outcomes. The positive inuence of heterogeneity in the ethnic dimension turns to be not negligible, too. Conversely, the eect of demographic diversity typically vanishes once detailed rm specic characteristics are included as control variables

Keywords: Labor diversity; patenting activity; extensive and intensive margins; (follow links to similar papers)

JEL-Codes: C23; J24; L20; (follow links to similar papers)

41 pages, November 1, 2010

Published as: Parrotta, P., Pozzoli, D. and M. Pytlikova (2013): "The Nexus between Labor Diversity and Firm's Innovation." Journal of Population Economics (IF 1.336). Currently published as Online First: http://www.springerlink.com/openurl.asp?genre=article&id=doi:10.1007/s00148-013-0491-7

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