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Marshall meets Bartik: Revisiting the mysteries of the trade

Yasusada Murata and Ryo Nakajima
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Yasusada Murata: College of Economics, Nihon University
Ryo Nakajima: Department of Economics, Keio University

No 2023-015, Keio-IES Discussion Paper Series from Institute for Economics Studies, Keio University

Abstract: We identify a causal effect of top inventor inflows on patent productivity of local inventors by combining the idea-generating process described by Marshall (1890) with the Bartik (1991) instruments involving state taxes and commuting zone characteristics of the United States. We find that the 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 heterogeneity in state taxes.

Keywords: knowledge spillovers; knowledge sharing; Bartik instruments; mysteries of the trade; idea-generating process (search for similar items in EconPapers)
JEL-codes: C26 J61 O31 R12 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2023-09-28
New Economics Papers: this item is included in nep-geo, nep-lab and nep-ure
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