Working Papers,
Copenhagen Business School, Department of Economics

Abstract: While recent work has documented a nexus between international trade and firm innovation, the underlying mechanisms explaining _rms' innovation in response to import competition are thus far poorly understood. To identify such mechanisms and their economic relevance, we use longitudinal linked employer-employee data from Denmark (1995-2012) and conduct analyses at both the firm and worker levels. We first show that import competition triggers a significant increase in innovation. Approximately 40 percent of the innovation effect is attributable to the increase in the share of R&D workers; 14 percent of this increase in the share of R&D workers is due to within-firm worker switching to R&D jobs, while 80 percent is explained by between-firm worker reallocation. Furthermore, we show that having a larger degree of between-firm worker reallocation to R&D jobs relative to within-firm switching is associated with more innovation. The salience of between-firm reallocation is further confirmed by a worker-level analysis, and its importance to innovation is underscored when we extend our analysis to Portugal.

Keywords: Import competition; Innovation; Between-firm worker reallocation; Within-firm worker reallocation

JEL-codes: F12; F14; O31

60 pages, March 26, 2021

Full text files

af086376-b45c-4e28-82cd-80a2f955d55e  Full text

Download statistics

• Copenhagen Business School, Department of Economics
• Ordering Working Papers
• Home page for this series

Questions (including download problems) about the papers in this series should be directed to CBS Library Research Registration Team ()
Report other problems with accessing this service to Sune Karlsson ().

This page generated on 2024-02-05 17:10:58.