Labour market mobility, knowledge diffusion and innovation

Utilising a unique Swedish matched employer–employee dataset, which has been pooled with firm-level patent application data, we provide new evidence that knowledge workers’ mobility has a positive and strongly significant impact on firm innovation output, as measured by firm patent applications. The effect is statistically and economically highly significant for knowledge workers who have previously worked in a patenting firm (the learning-by-hiring effect), whereas only limited impact could be detected for firms losing knowledge workers (the learning-by-diaspora effect). No effects were detected for inexperienced university graduates. Finally, the effect is more pronounced when the joining worker originates from within the same region.