Labor Mobility Foster Innovation? Evidence from Sweden Pontus Braunerhjelm, Ding Ding and Per Thulin Royal Institute of Technology Department of Industrial Economics and Management

Structure of the Presentation Why is this interesting? (Motivation) Previous Research Hypotheses (Research Question) Methodology and Data Results (Tesing the Hypotheses)

Why is this interesting? (Motivation) Firm Labor Market Firm

Why is this interesting? (Motivation) Firm Labor Market Firm

Why is this interesting? (Motivation) Firm Labor Market Firm Patenting Firm Non-Patenting Firm Firm

Why is this interesting? (Motivation) Firms Patenting Firms Non- Patenting Firms Patenting Firms Non- Patenting Firms Turnover from Firm’s perspective

Why is this interesting? (Motivation) Firms Patenting Firms Non- Patenting Firms Patenting Firms Non- Patenting Firms Difference? What if the job switching cross region?

Why is this interesting? (Motivation) Firms Patenting Firms Non- Patenting Firms Patenting Firms Non- Patenting Firms Difference? What if the job switching cross region?

Why is this interesting? (Motivation) Firms Patenting Firms Non- Patenting Firms Patenting Firms Non- Patenting Firms Difference?

Defined: R&D Workers Job Function as Professional and Technicians and associate professional Tertiary Education worker in Nature, Technical ， Agriculture or Health Science Total Employment According to Swedish Standard Classification of Occupations (SSYK). According to Swedish Educational Terminology (SUN2000).

Job Function as Professional and Technicians and associate professional Tertiary Education worker in Nature, Technical ， Agriculture or Health Science Total Employment Defined: R&D Workers According to Swedish Standard Classification of Occupations (SSYK). According to Swedish Educational Terminology (SUN2000).

Defined: R&D Workers Support Worker ： Job Function as Technicians and associate professionals (head group NO.3) Hold at least a bachelor degree or beyond in Nature, Technical, Agriculture or Health Science.

Defined: R&D Workers Professional Worker: Job Function as Professionals (Head Group No.2) Hold at least a bachelor degree or beyond in Nature, Technical, Agriculture or Health Science. Support Worker ： Job Function as Technicians and associate professionals (head group NO.3) Hold at least a bachelor degree or beyond in Nature, Technical, Agriculture or Health Science.

Defined: R&D Workers R&D workers Support Workers Professional workers Stayers Joiners from patenting firms Joiners from non patenting firms Graduate Other joiners Leavers to patenting firms Leavers to non patenting firms Intra-regionInter-region

Defined: R&D Workers R&D workers Support Workers Professional workers Stayers Joiners from patenting firms Joiners from non patenting firms Graduate Other joiners Leavers to patenting firms Leavers to non patenting firms Intra-regionInter-region

Defined: R&D Workers R&D workers Support Workers Professional workers Stayers Joiners from patenting firms Joiners from non patenting firms Graduate Other joiners Leavers to patenting firms Leavers to non patenting firms Intra-regionInter-region

Defined: R&D Workers R&D workers Support Workers Professional workers Stayers Joiners from patenting firms Joiners from non patenting firms Graduate Other joiners Leavers to patenting firms Leavers to non patenting firms Intra-regionInter-region

Previous Research Almeida and Kogut (1999) : In Silicon Valley, engineers who move inter-firm are the major patent holder. Agrawal and Cockburn et al (2006) : Social relationship stimulate the knowledge flow. Oettl and Agrawal (2008) : The former firm lost the human capital but receive the knowledge flow from worker’s new firms. Kaiser and Kongsted et al (2011) : Between Danish firms, there exist positive relationship between labor mobility and the firm’s innovative activity. This relationship is stronger if workers join from innovative firms.

Hypotheses (Research Question) Hypothesis 1: We expect inter firm labor movement of R&D workers increase the knowledge flow and represented as an increase of the number of patent application. Hypothesis 2: We expect the effect the the labor mobility of R&D workers who comes or goes to a firm had patent application before, is stronger. Hypothesis 3: We expect the effect the inter-regional labor movement is stronger, due to the knowledge similarity in same region. Estimator: Negative Binomial Regression (Count data)

Methodology Sub-index St denotes stayers, J,P joiners from patenting firms, J,NP joiners from non-patenting firms, G joiners from tertiary education, Su support workers, L,P leavers to patenting firms and L,NP leavers to non-patenting firms, Oj other joiner without former firm’s information, Else the rest labor. QL denotes quality-adjusted labor input, K refers to the physical capital stock. Normalizing marginal productivity for Stayers to one.

Pre-sample estimation ( ) Control Firm- Specific Heterogeneity in Innovative Capacity y Pre- sample Dummy Pre- sample Estimator Equal to 1 if the firm had ever innovated during the pre-sample period.

Controls Firm level Controls Firm Size(Employee/ R&D worker) Capital Stock Pre-Sample Controls Pre-sample Dummy Pre-sample Estimator Regional Controls Inter-Region Labor Mobility In Inter-Region Labor Mobility Out Intra-Region Labor Mobility Regional Teri Rate Density Ln(Access Measurement) Industry Dummies (12 Industries) Year Dummies (8 Year) Regional Dummies (72 FA regions)

Data Patent Application Data Firm Level Data Individual Level Data From 1987, the data include 24,649 observations, 8573 unique firms and 154,642 patent application. Contains 1,137,028 firms and 1,214,900 establishments. Exclude firms from public sector Exclude firms founded during estimation period Exclude firms without R&D workers Covers 2001 to 2008

Descriptive Statistics All ObservationsObservation with pre- sample patent Observations without pre-sample patent VariablesMeansStd. DevMeansStd. DevMeansStd. Dev Number of Patent Applications Firm Size and Capital Stock Employ R&D Relevant worker Tertiary education worker Capital Stock (in Mio, SEK) Firms had patent application during pre-sample period. Firms had no patent application during pre-sample period.

All ObservationsObservation with pre- sample patent Observations without pre-sample patent VariablesMeansStd. DevMeansStd. DevMeansStd. Dev Number of Patent Applications Firm Size and Capital Stock Employ R&D Relevant worker Tertiary education worker Capital Stock (in Mio, SEK) Descriptive Statistics Firms had patent application during pre-sample period. Firms had no patent application during pre-sample period.

All ObservationsObservation with pre- sample patent Observations without pre-sample patent VariablesMeansStd. DevMeansStd. DevMeansStd. Dev R&D Mobility (share of employee) Joiners from patenting firms Intra-Regional Joiners from patenting firms Inter-Regional Joiners from patenting firms Joiners from non-patenting firms Intra-Regional Joiners from non- patenting firms Inter-Regional Joiners from non- patenting firms Descriptive Statistics

All ObservationsObservation with pre- sample patent Observations without pre-sample patent VariablesMeansStd. DevMeansStd. DevMeansStd. Dev R&D Mobility (share of employee) Joiners from patenting firms Intra-Regional Joiners from patenting firms Inter-Regional Joiners from patenting firms Joiners from non-patenting firms Intra-Regional Joiners from non- patenting firms Inter-Regional Joiners from non- patenting firms Descriptive Statistics

All ObservationsObservation with pre- sample patent Observations without pre-sample patent VariablesMeansStd. DevMeansStd. DevMeansStd. Dev R&D Mobility (share of employee) Leavers to patenting firms Intra-Regional leavers to patenting firms Inter-Regional leavers to patenting firms Leavers to non-patenting firms Intra-Regional leavers to non- patenting firms Inter-Regional leavers to non- patenting firms Descriptive Statistics

All ObservationsObservation with pre- sample patent Observations without pre-sample patent VariablesMeansStd. DevMeansStd. DevMeansStd. Dev R&D Mobility (share of employee) Leavers to patenting firms Intra-Regional leavers to patenting firms Inter-Regional leavers to patenting firms Leavers to non-patenting firms Intra-Regional leavers to non- patenting firms Inter-Regional leavers to non- patenting firms Descriptive Statistics

All ObservationsObservation with pre- sample patent Observations without pre-sample patent VariablesMeansStd. DevMeansStd. DevMeansStd. Dev R&D Mobility (share of employee) Graduates Other joiners Stayers Support workers High Turnover Descriptive Statistics

Results-Joiner Share of Total R&D workerShare of Total Employment worker Patent ApplicationCoefficient Patent dummy t ***2.275***2.272***2.318***2.311***2.312*** R&D worker share (Base on Stayer) Joiners0.517***1.447*** Joiners from patenting firms 0.773***3.083*** Intra-Regional Joiners from patenting firms 1.036***3.122*** Inter-Regional Joiners from patenting firms *** Joiners from non-patenting firms0.284*0.630 Intra-Regional Joiners from non- patenting firms Inter-Regional Joiners from non- patenting firms 0.457*2.131*** Different Types of R&D workers The number of total R&D workers Different Types of R&D workers The number of total Employee

Results-Joiner Share of Total R&D workerShare of Total Employment worker Patent ApplicationCoefficient Patent dummy t ***2.275***2.272***2.318***2.311***2.312*** R&D worker share (Base on Stayer) Joiners0.517***1.447*** Joiners from patenting firms 0.773***3.083*** Intra-Regional Joiners from patenting firms 1.036***3.122*** Inter-Regional Joiners from patenting firms *** Joiners from non-patenting firms0.284*0.630 Intra-Regional Joiners from non- patenting firms Inter-Regional Joiners from non- patenting firms 0.457*2.131***

Results-Joiner Share of Total R&D workerShare of Total Employment worker Patent ApplicationCoefficient Patent dummy t ***2.275***2.272***2.318***2.311***2.312*** R&D worker share (Base on Stayer) Joiners0.517***1.447*** Joiners from patenting firms 0.773***3.083*** Intra-Regional Joiners from patenting firms 1.036***3.122*** Inter-Regional Joiners from patenting firms *** Joiners from non-patenting firms0.284*0.630 Intra-Regional Joiners from non- patenting firms Inter-Regional Joiners from non- patenting firms 0.457*2.131***

Results-Joiner Share of Total R&D workerShare of Total Employment worker Patent ApplicationCoefficient Patent dummy t ***2.275***2.272***2.318***2.311***2.312*** R&D worker share (Base on Stayer) Joiners0.517***1.447*** Joiners from patenting firms 0.773***3.083*** Intra-Regional Joiners from patenting firms 1.036***3.122*** Inter-Regional Joiners from patenting firms *** Joiners from non-patenting firms0.284*0.630 Intra-Regional Joiners from non- patenting firms Inter-Regional Joiners from non- patenting firms 0.457*2.131***

Results-Leaver and Others Share of Total R&D workerShare of Total Employment worker Patent ApplicationCoefficient Graduates ***2.035***2.001*** Other Joiners0.428*0.421*0.422*1.407***1.337***1.356*** Support Workers *0.386*0.392* Leavers-0.330* Leavers to patenting firms Intra-Regional leavers to patenting firms Inter-Regional leavers to patenting firms * Leavers to non-patenting firms-0.379* * Intra-Regional leavers to non- patenting firms *-2.671* Inter-Regional leavers to non- patenting firms Non R&D worker-0.736*-0.726*-0.730*

Results-Leaver and Others Share of Total R&D workerShare of Total Employment worker Patent ApplicationCoefficient Graduates ***2.035***2.001*** Other Joiners0.428*0.421*0.422*1.407***1.337***1.356*** Support Workers *0.386*0.392* Leavers-0.330* Leavers to patenting firms Intra-Regional leavers to patenting firms Inter-Regional leavers to patenting firms * Leavers to non-patenting firms-0.379* * Intra-Regional leavers to non- patenting firms *-2.671* Inter-Regional leavers to non- patenting firms Non R&D worker-0.736*-0.726*-0.730*

Results-Leaver and Others Share of Total R&D workerShare of Total Employment worker Patent ApplicationCoefficient Graduates ***2.035***2.001*** Other Joiners0.428*0.421*0.422*1.407***1.337***1.356*** Support Workers *0.386*0.392* Leavers-0.330* Leavers to patenting firms Intra-Regional leavers to patenting firms Inter-Regional leavers to patenting firms * Leavers to non-patenting firms-0.379* * Intra-Regional leavers to non- patenting firms *-2.671* Inter-Regional leavers to non- patenting firms Non R&D worker-0.736*-0.726*-0.730*

Results-Leaver and Others Share of Total R&D workerShare of Total Employment worker Patent ApplicationCoefficient Graduates ***2.035***2.001*** Other Joiners0.428*0.421*0.422*1.407***1.337***1.356*** Support Workers *0.386*0.392* Leavers-0.330* Leavers to patenting firms Intra-Regional leavers to patenting firms Inter-Regional leavers to patenting firms * Leavers to non-patenting firms-0.379* * Intra-Regional leavers to non- patenting firms *-2.671* Inter-Regional leavers to non- patenting firms Non R&D worker-0.736*-0.726*-0.730*

Results-Leaver and Others Share of Total R&D workerShare of Total Employment worker Patent ApplicationCoefficient Graduates ***2.035***2.001*** Other Joiners0.428*0.421*0.422*1.407***1.337***1.356*** Support Workers *0.386*0.392* Leavers-0.330* Leavers to patenting firms Intra-Regional leavers to patenting firms Inter-Regional leavers to patenting firms * Leavers to non-patenting firms-0.379* * Intra-Regional leavers to non- patenting firms *-2.671* Inter-Regional leavers to non- patenting firms Non R&D worker-0.736*-0.726*-0.730*

Results-Leaver and Others Share of Total R&D workerShare of Total Employment worker Patent ApplicationCoefficient Graduates ***2.035***2.001*** Other Joiners0.428*0.421*0.422*1.407***1.337***1.356*** Support Workers *0.386*0.392* Leavers-0.330* Leavers to patenting firms Intra-Regional leavers to patenting firms Inter-Regional leavers to patenting firms * Leavers to non-patenting firms-0.379* * Intra-Regional leavers to non- patenting firms *-2.671* Inter-Regional leavers to non- patenting firms Non R&D worker-0.736*-0.726*-0.730*

Results-Firm Controls and Pre-Sample Controls Share of Total R&D workerShare of Total Employment worker Patent ApplicationCoefficient Firm Size and Capital Stock Ln(Labor Force)0.258***0.257***0.259***0.246*** (6.87)(6.83)(6.87)(5.84)(5.86)(5.84) Ln(Capital Stock)0.0571***0.0573***0.0574***0.0542***0.0538***0.0546*** (5.70)(5.66)(5.61)(5.11)(5.04)(4.98) Pre-sample variables Ln(FE)0.381*** 0.383***0.399*** 0.401*** (8.14)(7.98)(7.90)(8.05)(7.95)(7.78) FE dummy2.949***2.942***2.943***3.034***3.018***3.020*** (21.58)(21.42)(21.28)(22.18)(21.91)(21.63)

Labor Mobility increase the knowledge flow. Joiners from patenting firms have stronger effect compare to joiners from non-patenting firms to innovation activity. Inter-regional joiner from patenting firm have a stronger effect compare to intra-regional joiner to innovation activity. Inter-regional joiner from non-patenting firms have a positive effect to innovation activity.. Gradates, Other joiners and support workers have positive effects to innovation activity. Conclusion

Inter-regional leaver to patenting firms have a positivity effect but less significant. Leavers to non-patenting firms have a negative effect to innovation activity. Robustness Test shows the result are stable. Conclusion

Thank you very much.