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The Nexus between Labor Diversity and Firm´s Innovation

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Abstract

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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  • Parrotta, Pierpaolo & Pozzoli, Dario & Pytlikova, Mariola, 2010. "The Nexus between Labor Diversity and Firm´s Innovation," Working Papers 10-15, University of Aarhus, Aarhus School of Business, Department of Economics.
  • 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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    Keywords

    Labor diversity; patenting activity; extensive and intensive margins;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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