Claudio Fassio
Lund University
Fabio Montobbio
University of Turin - Department of Economics and Statistics
Alessandra Venturini
University of Turin - Department of Economics; Institute for the Study of Labor (IZA); European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS)

Robert Schuman Centre for Advanced Studies Research Paper No. RSCAS 2015/41

This paper uses the French and the UK Labour Force Surveys and the German Microcensus to estimate the effects of different components of the labour force on innovation at the sectoral level between 1994 and 2005. The authors focus, in particular, on the contribution of migrant workers. We adopt a production function approach in which we control for the usual determinants of innovation, such as R&D investments, stock of patents and openness to trade. To address possible endogeneity of migrants we implement instrumental variable strategies using both two-stage least squares with external instruments and GMM-SYS with internal ones. In addition we also account for the possible endogeneity of native workers and instrument them accordingly. Our results show that highly-educated migrants have a positive effect on innovation even if the effect is smaller relative to the positive effect of educated natives. Moreover, this positive effect seems to be confined to the high-tech sectors and among highly-educated migrants from other European countries. More...