 Processing immigration shocks: Firm responses on the innovation marginRowena Gray, Giulia Montresor and Greg C. Wright Journal of International Economics, 2020, vol. 126, issue C Abstract: The extent to which firms respond to labor supply shocks has important implications for local and national economies. We exploit firm-level panel data on product and process innovation activities in the United Kingdom and find that the large, unanticipated, low-skill labor supply (immigration) shock generated by the 2004 expansion of the European Union to Eastern European countries increased process innovation and reduced product innovation, with overall innovation activity going up. This implies that the innovation response to labor supply shocks may be more nuanced than the previous literature has suggested. Both of these effects are increasing in the low-skill intensity of firm production. In addition, the reduction in product innovation is lessened for firms whose output is sold locally, which is consistent with a demand side effect generated by the labor supply shock. Keywords: Product innovation; Process innovation; Immigration; Labor supply shock (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:126:y:2020:i:c:s0022199620300611 DOI: 10.1016/j.jinteco.2020.103345 Access Statistics for this article Journal of International Economics is currently edited by Gourinchas, Pierre-Olivier and RodrÃguez-Clare, Andrés More articles in Journal of International Economics from Elsevier |
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