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Local Labor Markets and Corporate Innovation

Author

Listed:
  • Jiang, Cheng
  • John, Kose
  • Lee, Kyeong Hun
  • Xu, Emma Qianying

Abstract

We construct a measure (fLMA) of the extent to which neighboring firms hire similar types of workers, based on the similarity between the labor profile of a firm and that of its locality. We show that a firm’s innovation is positively related to fLMA. The enhanced labor mobility induced by higher fLMA is an important channel for this positive relation. This relation is stronger when firms have increased outside job opportunities for employees, increased knowledge spillovers via coworkership, and more employee stock options. Innovation is higher when intellectual property ownership is with employers, not employees. This effect increases in fLMA.

Suggested Citation

  • Jiang, Cheng & John, Kose & Lee, Kyeong Hun & Xu, Emma Qianying, 2026. "Local Labor Markets and Corporate Innovation," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 61(1), pages 441-479, February.
    • Handle: RePEc:cup:jfinqa:v:61:y:2026:i:1:p:441-479_13
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