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 European Union in 1999. We exploit a quasi-experimental setting created by Switzerland's implementation of the treaty, which initially eased entry restrictions only for commuters from neighboring countries, thereby inducing a large inflow of "cross-border inventors" in regions close to the border. We find that the treaty increased patenting in such regions relative to comparable ones farther away from the border. We find no evidence indicating the displacement of native inventors or a reduction in the patenting activity of Switzerland's neighboring countries. We also 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, albeit without increasing the productivity of local peers outside direct collaborations.