Free movement of inventors: open-border policy and innovation in Switzerland

We study the innovation effects of the Agreement on the Free Movement of Persons, signed by Switzerland and the EU in 1999. We exploit a quasi-experimental setting created by Switzerland’s implementation policy, which initially eased off entry restrictions only for commuters from neighboring countries and induced a large inflow of “cross-border inventors” in the regions next to the border. We find that this increased patenting in such regions, relative to comparable ones farther away from the border. We do not find evidence indicating the displacement of native inventors nor a reduction in the patenting activity of Switzerland’s neighboring countries. We find that incumbent inventors in regions next to the border increased their productivity, thanks to patents in collaboration with cross-border inventors. We provide evidence suggesting that cross-border inventors contributed to Swiss patenting by enabling R&D laboratories to enlarge by hiring inventors with valuable skills, albeit without increasing the productivity of local peers outside direct collaborations.