Knowledge Spillovers of Innovation Policy through Labor Mobility: An Impact Evaluation of the FONTAR Program in Argentina

Although knowledge spillovers are at the core of the innovation policy's justification, they have never been properly measured by any impact evaluation. This paper fills this gap by estimating the spillover effects of the FONTAR program in Argentina. We use an employer-employee matched panel dataset with the entire population of firms and workers in Argentina for the period 2002-2010. This dataset allows us to track the mobility of qualified workers from FONTAR beneficiary firms to other firms and, therefore, to identify firms that indirectly benefit from the program through knowledge diffusion. We use a combination of fixed effect and matching to estimate the causal effect-direct and indirect-of the program on various measures of performance. Our findings are robust to a placebo test based on anticipatory effects and show that the program increased employment, wages, and the exporting probability of both direct and indirect beneficiaries. The analysis of the dynamic of these effects confirms that performance does not improve immediately after the treatment for neither direct nor indirect beneficiaries.