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The Nexus between Labor Diversity and Firm´s Innovation

This paper investigates the nexus between labor diversity and innovation in a population of Danish rms. Specically, exploiting information retrieved from a comprehensive linked employer-employee database and implementing a proper instrumental variable strategy, we are able to identify the contribution of diversity in cultural background, skills and demographic characteristics to valuable rm's innovation activity. The latter is measured by: (1) the rm's propensity to apply for a patent, (2) the number of patent applications (intensive margin) and (3) the rm's ability to patent in dierent technological areas (extensive margin). We nd that skill diversity plays a key role in propelling rm's innovation outcomes. The positive inuence of heterogeneity in the ethnic dimension turns to be not negligible, too. Conversely, the eect of demographic diversity typically vanishes once detailed rm specic characteristics are included as control variables

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Paper provided by University of Aarhus, Aarhus School of Business, Department of Economics in its series Working Papers with number 10-15.

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Length: 41 pages
Date of creation: 01 Nov 2010
Date of revision:
Handle: RePEc:hhs:aareco:2010_015
Note: Published as: Parrotta, P., Pozzoli, D. and M. Pytlikova (2013): "The Nexus between Labor Diversity and Firm's Innovation." Journal of Population Economics (IF 1.336). Currently published as Online First: http://www.springerlink.com/openurl.asp?genre=article&id=doi:10.1007/s00148-013-0491-7
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The Aarhus School of Business, Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark

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Fax: +45 8615 5175
Web page: http://www.asb.dk/departments/nat.aspx

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