Inventors’ Coworker Networks and Innovation

Sabrina Di Addario, Zhexin Feng and Michel Serafinelli

No 11432, CESifo Working Paper Series from CESifo

Abstract: This paper presents direct evidence on how firms’ innovation is affected by access to knowledgeable labor through co-worker network connections. We use a unique dataset that matches patent data to administrative employer–employee records from "Third Italy"—a region with many successful industrial clusters. Establishment closures displacing inventors generate supply shocks of knowledgeable labor to firms that employ the inventors’ previous co-workers. We estimate event-study models where the treatment is the displacement of a "connected" inventor (i.e., a previous coworker of a current employee of the focal firm). We show that the displacement of a connected inventor significantly increases connected inventors’ hiring. Moreover, the improved access to knowledgeable workers raises firms innovative activity. We provide evidence supporting the main hypothesized channel of knowledge transfer through firm-to-firm labor mobility by estimating IV specifications where we use the displacement of a connected inventor as an instrument to hire a connected inventor. Overall, estimates indicate that firms exploit displacements to recruit connected inventors and the improved capacity to employ knowledgeable labor within the network increases innovation.

Keywords: social connections; firm-to-firm labor mobility; patents; establishment closure (search for similar items in EconPapers)
JEL-codes: J23 J60 O30 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-cse, nep-lma, nep-net, nep-sbm, nep-soc, nep-tid and nep-ure
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Related works:
Working Paper: Inventors' Coworker Networks and Innovation (2024)
Working Paper: Inventors' Coworker Networks and Innovation (2024)
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