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The Nexus between Labor Diversity and Firm's Innovation

Author

Listed:
  • Pierpaolo Parrotta

    (Aarhus School of Business and Social Sciences, Aarhus University)

  • Dario Pozzoli

    (Aarhus School of Business and Social Sciences, Aarhus University)

  • Mariola Pytlikova

    (Aarhus School of Business and Social Sciences, Aarhus University)

Abstract

In this paper we investigate the nexus between rm labor diversity and innovation using a linked employer-employee data from Denmark. Specically, exploiting information retrieved from the comprehensive database and implementing a proper instrumental variable strategy, we are able to identify the contribution of workers diversity in cultural background, skills and demographic characteristics to valuable firm's innovation activity. The latter is measured by: (1) the firm's propensity to apply for a patent, (2) the number of patent applications (intensive margin) and (3) the firm's ability to patent in different technological areas (extensive margin). We find that skill and ethnic diversity plays an important role in propelling firm's innovation outcomes. Conversely, the effect of demographic diversity typically vanishes once detailed firm-specic characteristics are included as control variables.

Suggested Citation

  • Pierpaolo Parrotta & Dario Pozzoli & Mariola Pytlikova, 2011. "The Nexus between Labor Diversity and Firm's Innovation," Norface Discussion Paper Series 2011005, Norface Research Programme on Migration, Department of Economics, University College London.
    • Handle: RePEc:nor:wpaper:2011005
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    More about this item

    Keywords

    Labor diversity; patenting activity; extensive and intensive margins.;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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