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The Nexus between Labor Diversity and Firm's Innovation

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  • Parrotta, Pierpaolo

    () (IÉSEG School of Management)

  • Pozzoli, Dario

    () (Copenhagen Business School)

  • Pytlikova, Mariola

    () (CERGE-EI)

Abstract

In this paper we investigate the nexus between firm labor diversity and innovation using a linked employer-employee data from Denmark. Specifically, exploiting information retrieved from this comprehensive database and implementing proper instrumental variable strategies, we are able to identify the contribution of workers' diversity in cultural background, education and demographic characteristics to valuable firm's innovation activity. The latter is measured by: (1) the firm's propensity to apply for a patent, (2) the number of patent applications (intensive margin) and (3) the firm's ability to patent in different technological areas (extensive margin). We find that ethnic diversity plays an important role in propelling firm's innovation outcomes.

Suggested Citation

  • Parrotta, Pierpaolo & Pozzoli, Dario & Pytlikova, Mariola, 2012. "The Nexus between Labor Diversity and Firm's Innovation," IZA Discussion Papers 6972, Institute for the Study of Labor (IZA).
    • Handle: RePEc:iza:izadps:dp6972
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    Keywords

    patenting activity; extensive and intensive margins; ethnic diversity; labor diversity;

    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J82 - Labor and Demographic Economics - - Labor Standards - - - Labor Force Composition
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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