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Labor Force Demographics and Corporate Innovation

Author

Listed:
  • François Derrien
  • Ambrus Kecskés
  • Phuong-Anh Nguyen

Abstract

Firms in younger labor markets produce more innovation. We establish this by instrumenting the current labor force with historical births in each local labor market in the United States. Analyses of firms and inventors allow us to rule out unobservable heterogeneity across local labor markets and firms, life cycles, and other effects. Corporate innovation in younger labor markets reflects the innovative characteristics of younger labor forces, and its market value is higher. Younger workers as a group, not merely inventors by themselves, produce more innovation for firms through the labor force channel rather than through a financing or consumption channel.Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Suggested Citation

  • François Derrien & Ambrus Kecskés & Phuong-Anh Nguyen, 2023. "Labor Force Demographics and Corporate Innovation," The Review of Financial Studies, Society for Financial Studies, vol. 36(7), pages 2797-2838.
    • Handle: RePEc:oup:rfinst:v:36:y:2023:i:7:p:2797-2838.
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    File URL: http://hdl.handle.net/10.1093/rfs/hhac079
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    More about this item

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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