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Human resources and innovation: Total Factor Productivity and foreign human capital

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  • Claudio Fassio
  • Sona Kalantaryan
  • Alessandra Venturini

Abstract

The objective of this paper is to analyse the role of migrants in innovation in Europe. We use Total Factor Productivity as a measure of innovation and focus on the three largest European countries – France, Germany and the United Kingdom – in the years 1994-2007. Unlike previous research, which mainly employs a regional approach, we analyse the link between migration and innovation at the sectoral level. This allows us to measure the direct contribution of migrants in the sector in which they are actually employed. Moreover, it allows a distinction between the real contribution of migrants to innovation from possible inter-sectoral complementarities, which might as well foster innovation. We control for the different components of human-capital, such as age, education and diversity of origin. To address the possible endogeneity of migration we draw on an instrumental variable strategy originally devised by Card (2001) and adapt it at the sector level The results show that overall migrants are relevant in all sectors, but some important differences emerge across sectors: highly-educated migrants show a larger positive effect in the high-tech sectors, while middle- and low-educated ones are more relevant in manufacturing. The diversity of countries of origin contributes to innovation only in the services sectors, confirming that in empirical analyses at the regional or national level the diversity measure might capture the complementarity between sectors rather than the contribution of different national skills. This implies that the diversity should not guide the migration policy which instead should be linked to the specific demand for labour of firms and not to pursue a generic search for highly skilled migrants.

Suggested Citation

  • Claudio Fassio & Sona Kalantaryan & Alessandra Venturini, 2015. "Human resources and innovation: Total Factor Productivity and foreign human capital," RSCAS Working Papers 2015/43, European University Institute.
  • Handle: RePEc:rsc:rsceui:2015/43
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    Cited by:

    1. Gouranga Gopal Das & Sugata Marjit, 2018. "Skill, Innovation and Wage Inequality: Can Immigrants be the Trump Card?," CESifo Working Paper Series 7082, CESifo Group Munich.
    2. Michael Landesmann & Sandra M. Leitner, 2018. "Immigration and Innovation," wiiw Working Papers 158, The Vienna Institute for International Economic Studies, wiiw.
    3. Jaeger, David A & Ruist, Joakim & Stuhler, Jan, 2018. "Shift-Share Instruments and the Impact of Immigration," CEPR Discussion Papers 12701, C.E.P.R. Discussion Papers.
    4. Andrea Goldstein & Alessia Amighini & Andrea Goldstein & Alessandra Venturini, 2016. "International Migration Policies: Should They Be A New G20 Topic?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 24(4), pages 93-110, July.
    5. repec:eur:ejesjr:100 is not listed on IDEAS
    6. repec:gam:joitmc:v:3:y:2017:i:4:p:21-:d:130975 is not listed on IDEAS

    More about this item

    Keywords

    Migration; innovation; highly skilled migrants; low skilled migrants; Total Factor Productivity.;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • 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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