Mobility of highly skilled individuals and local innovation activity

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Highlights

  • Inventors are less geographically confined than non-inventor migrants.

  • Countries’ technology similarity is the main driver of inventors’ mobility.

  • Linguistic and religion proximity is important determinant for non-inventor migration.

  • Inventors’ migration significantly contributes to innovation activity at the host.

Abstract

Mobilization of valuable resources, especially of talented individuals, figures prominently in firms’ strategies and policy agendas. Thus far, there is a dearth of empirical evidence in the field. The contribution of this paper is two-pronged: first, to perform an integral evaluation of the different factors that shape the mobility of patent inventors -a specific class of highly skilled individuals, who are deeply involved in the production of innovation and are important vehicle of technological knowledge circulation- and second, to assess the effects of their mobility on local innovation activity. Employing detailed patent data to track their moves, we use a gravity model to examine whether geographic, technological, and cultural proximities between countries, among other factors, shape the flows of these talented individuals. Using the same framework of analysis, we also examine the mobility of non-inventor migrants. Our results show that although geographic distance still plays a role, inventor migrants are less geographically confined than non-inventor migrants. Countries’ technology similarity is the main driver of inventor moves, whereas cultural -linguistic and religion- proximity matters more for non-inventor migrants. Finally, the knowledge and skills that move with the inventors have a positive effect on the production of new knowledge in the host country.

Introduction

Economic development is about mobilizing valuable resources to improve standards of living. Along with the typical resources, labor and capital, there is a growing recognition of the “intangible” resources such as technological knowledge, creativity, innovation, as important factors for economic growth. Behind all of these, there is ”human talent” - the inner ability to create ideas and objects; some of them with high economic value.

The globalized process has mainly focused on the international mobility of capital, goods, (unskilled) labor, technology and to a lesser extent on the international mobility of high skilled, qualified, talented people. Recent reports have emphasized that the war for talent will be the major human resource issue in the upcoming years, when the people pipeline is the most crucial variable separating winners and losers in the marketplace.1 As population and workforce are trending down in most of mature economies the fight for talent will be even more intense. Companies may go to creative, perhaps even extreme, lengths to secure and retain talent and knowledge to stay competitive. Therefore, global mobility will play a key role in solving the labour availability.

Understanding and harnessing talent mobility is therefore more critical than ever. The mobility of highly skilled personnel in science, technology, engineering and mathematics (so-called STEM workers), has figured prominently in many policy agendas. STEM skills are associated with advanced technical skills, which are seen as strong drivers of technology, knowledge-driven growth and productivity gains.2 Migrants represent a small proportion of total worldwide population of about 3% (UN-DESA and OECD, 2013); however, the share of high-skilled and particularly STEM migrants in some OECD countries has dramatically increased in recent years (Kerr et al., 2016). But despite the increasing international flows of STEM workers’ and their recognized contribution in economic growth and convergence across countries (Eaton and Kortum, 1999), systematic empirical evidence on the impact of their migration on knowledge diffusion and (the performance of) regional innovation systems is still scarce.

The purpose of this paper is to study the mobility of highly skilled migrants and particularly of patent inventors. This specific class of workers belongs to the “upper-tail” of the human capital distribution and is more homogeneous than the tertiary educated or even STEM workers.3 There are two reasons why we focus on patent inventors: First, although inventors are just a small proportion of the skilled labour, they have a significant economic contribution; they are deeply involved in the production of innovation, which in turn is the main driver of economic growth (Romer, 1990). Second, they are also important vehicle of knowledge transmission - knowledge that cannot be codified and transmitted through other information channels requires ’knowledge-carriers’ to physically move and create spillovers elsewhere (Breschi, Lissoni, 2009, Glaeser, J.A. Scheinkman, Shleifer, 1995, Lucas, 1988).

First, we want to explore what moves the patent inventors. Inventor’s mobility in our approach relates to the number of countries a patent inventor changes during lifetime every time she files for a new patent. To track inventor moves, we rely on a patent database that provides bilateral counts of ”migrant inventors” for a large number of years as well as a considerable number of sending and receiving countries. By using a gravity model as our baseline, we analyze how geographic, technological, and cultural proximity between origin and host countries, along with other relevant country level factors, shape the flows of talented individuals. Our empirical gravity model is consistent with an underlying micro-founded random utility model (Bertoli and Moraga, 2015), while importantly also accounting for recent innovations in the empirical literature. We employ a zero-inflated negative binomial specification to account for the high proportion of zeroes in the dependent variable. Proximity has been explored in the past literature in a piecemeal approach (at least some types) in studying migration flows. In the present study, we perform a comprehensive analysis of different types of proximities, institutions and policies for all flows of inventors as well as accounting for the technological performance of their origin and destination country. Further, within the same framework and for comparison purposes, we also explore migration patterns of non-inventor flows.

Second, we assess whether local production of technological knowledge is strongly tied to the migration of talented patent inventors. As every inventor is a knowledge-carrier of her home-knowledge stock, we examine the inventor-weighted channel of external knowledge flows on a country’s innovation production, proxied by the number of patents. Thus far, this channel has been understudied. A vast literature has focuses on the role of international trade (Coe, Helpman, 1995, Keller, 2002), patent citation (Branstetter, 2001, Jaffe, Trajtenberg, Henderson, 1993, Peri, 2005), and foreign direct investment (Keller and Yeaple, 2009) as channels of knowledge transfer, but literature and systematic, global empirical evidence (especially beyond the US) on the migration of inventors as a channel is scarce.

Our paper thus relates and contributes to two important strands in the literature. Broadly, it associates to the literature on the determinants of international migration (Beine, Docquier, Oz̎den, 2011, Czaika, Parsons, 2015, Grogger, Hanson, 2011, Mayda, 2010, Ortega, Peri, 2013) and how they shape migrant flows. Our paper, however, speaks most directly to the strand of literature that specifically focuses on inventors’ mobility (Miguélez, Moreno, 2014, Miguélez, Moreno, Surinach, 2010). Additionally, our paper makes an attempt to jointly study the drivers of both inventor and non-inventor flows within a common simple framework of analysis and for a large panel of countries. It also contributes to the debate on whether geographical distance still plays any role in explaining economic phenomena or technological advances have indeed overcome geography (Cairncross, 1997, Friedman, 2005, McCann, 2008, Rodríguez-Pose, Crescenzi, 2008).

Furthermore, we contribute to the literature of technological knowledge diffusion and particularly via the channel of the mobility of highly skilled individuals.4 This literature is thin and focuses mainly on the US. Contributions have explored the role of immigrant inventors in the process of technological development in the US from an historical perspective (Akcigit, Grigsby, Nicholas, 2017, Akcigit, Grigsby, Nicholas, 2017), in recent time periods (Hunt, Gauthier-Loiselle, 2010, Kerr, Lincoln, 2010) and the impacts of cross-state mobility of inventors (Drivas et al., 2016). Other studies have explored the role of knowledge networks through ethnic ties between the patent inventors diaspora in the US and innovation in their home countries (Agrawal, Kapur, McHale, Oettl, 2011, Breschi, Lissoni, Miguelez, 2017, Ganguli, 2015, Kerr, 2008, Kerr, Lincoln, 2010) with conclusions, especially about the effects of diasporas on knowledge absorption at home, to vary significantly. Even more scant is the evidence for any other country (for the UK; Crescenzi and Gagliardi (2015)) and even Europe (Miguélez, Moreno, 2013, Miguélez, Moreno, 2013).

Our paper attempts to integrate two previously disconnected, yet important strands of research: the literature on the migration of inventor individuals and the literature documenting the role of migrant inventors in facilitating knowledge diffusion across borders around the world.5 Its contribution lies in performing an integral analysis of the factors that shape the mobility of highly talented individuals as well as the evaluation of their mobility on the innovation capabilities of a host economy for a large panel of countries. As an exercise, within the same framework we also compare the mobility of non-inventor flows.

We apply our modeling approach to 30 OECD countries over the period 2000–2012 with two key questions in mind: (i) What shapes the international mobility of inventors? (ii) What is the impact of inventor movers on innovation activity in the destination country?

Our evidence shows that proximity matters for migration. Gravity emerges everywhere; in the flows of inventor and non-inventor migrants; the former, however, stretch (about 1.5 times) farther in space than the latter. A first conclusion is therefore that geography has not been taken over by technological advancements and still shapes economic phenomena. This is evident by the significant drop in the mobility of inventors for distances large than 700 km. Within a distance of 700 km, there are four pairs of countries (Czech Republic and Germany, USA and Canada, Germany and Austria, and Germany and France) that exchange large flows of inventors. But technology certainly does matter. Technological proximity, and particularly the similarity in countries’ technologies (i.e., patents in the same fields), is the main driver of inventor mobility - a finding that emerges particularly strong for inventors originating from the most innovative countries. For them, geographic closeness and cultural (i.e., religion and linguistic) similarity, though significant, play a less important role - particularly the latter. In contrast, cultural proximity matters most for non-inventor migrants. Attractive country features for an inventor to re-locate herself are the quality of institutions and the job opportunities at the destination country as well as the trade linkages between origin and host country. Finally, we find that external knowledge, accessible to a country via inventors’ moves, contributes, on average, about 0.23 per cent to the production of new knowledge in the host country, especially when the incoming inventors originate from the most innovation efficient countries. We, thus, find significant evidence of knowledge transfer from inventor migration.

Our findings are therefore relevant also for the growth literature. Theoretical studies (Grossman, Helpman, 1991, Rivera-Batiz, Romer, 1991) have emphasized the important consequences of disembodied and embodied knowledge flows for growth. Our study shows such theoretical notions find empirical support by analyzing knowledge diffusion via the channel of highly skilled inventors’ mobility and its impact on local innovation activity. We find that knowledge flows are relevant to a country’s innovation production, as external knowledge accessed through the inflow of inventors has a positive effect, confirming thus the importance of knowledge flows embodied in people for technology transfer and economic growth.

Our results further highlight the importance of policies and factors conductive to attract patent inventors. High quality, efficient and effective regulatory environment - mainly related to competition, taxation, finance, investment, and doing businesses - and job opportunities and synergies at the destination country as well as intense trade activity are found to be important attractors for talented individuals. To the extent that external knowledge is relevant for local innovation activity, we argue that immigration policies should be welcoming to skilled and innovative individuals; The general stance on migration and foreigners may well also affect the inflow of talented inventors. Technological proximity is more important for them, but cultural proximity helps and a welcoming environment may well be an important factor in future migration flows. A message particularly relevant for countries with ageing and shrinking populations that are thinking of imposing harder restrictions on the migration of ordinary people.

The remainder of the paper proceeds as follows. Section 2 introduces the framework for analyzing migration flows and the estimation technique. Section 3 discusses the data. Section 4 presents the results. Finally, Section 5 summarizes the findings and concludes.

Section snippets

Modeling migration flows

The decision of inventors to move is influenced by the comparison between expected utilities of the origin and destination locations. Migrating across countries has costs, monetary and non-monetary. The geographical separation between countries proxies some of the distance-related costs such as the sunk cost of re-location that are difficult to measure empirically. Technological distance also proxies for costs of adjusting in different (or similar) technological environments. Similarly,

Data description and analysis

Our empirical analysis is based on 30 technologically advanced countries for the period 2000 to 2012.20 Data are obtained from a range of sources.

Information on inventors’ mobility (Flows), defined as the number of countries a patent inventor changes during lifetime every time she files for a new patent, is obtained from

Empirical results

This section presents our results. First, we examine the effect of various types of proximities and other institutional mainly factors in shaping international flows of inventors, and, second, whether these flows, and the knowledge they carry, have an impact on countries’ innovation activity.

Conclusion

Individuals are reservoirs of both skills and ideas and their location and mobility are keys to knowledge accumulation and diffusion. In advanced economies, innovation and technological knowledge have been both found to be strongly tied to the talented migrants. Thus far, only a scant few studies have studied the mobility of inventors and even fewer examined their impact on innovation performance.

This paper contributes to the literature by focusing on an understudied, yet important channel of

CRediT authorship contribution statement

Kyriakos Drivas: Investigation, Methodology. Claire Economidou: Conceptualization, Writing - review & editing. Dimitrios Karamanis: Software, Data curation, Visualization. Mark Sanders: Supervision.

Kyriakos Drivas is an Assistant Professor at the Department of Economics of the University of Piraeus, Greece. He has received his PhD from University of California-Berkeley, Department of Agricultural and Resource Economics. He has worked as an adjunct lecturer at Hellenic Open University, a post-doctoral researcher at the Agricultural University of Athens, the Athens University of Economics and Business and the Agriculture Economics Research Institute. He has also worked as a visiting

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      In recent years, a voluminous literature has begun to focus on the geographic reach of knowledge and technology (Fujita et al., 2004; Spulber, 2008; Drivas et al., 2016). Some scholars study market-based knowledge flows and believe that the knowledge and technology mastered by inventors or skilled immigrants contribute to the technological innovation of the host country (Miguelez & Noumedem Temgoua, 2020; Drivas et al., 2020). Patent licensing (Caviggioli et al., 2020; Losacker, 2021), patent collateral (Hochberg et al., 2018), and patent transfers (Galasso et al., 2013; Jin et al., 2021) directly affect innovation through trans-regional technology diffusion.

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    Kyriakos Drivas is an Assistant Professor at the Department of Economics of the University of Piraeus, Greece. He has received his PhD from University of California-Berkeley, Department of Agricultural and Resource Economics. He has worked as an adjunct lecturer at Hellenic Open University, a post-doctoral researcher at the Agricultural University of Athens, the Athens University of Economics and Business and the Agriculture Economics Research Institute. He has also worked as a visiting economist at the United States Patent and Trademark Office and external research associate at the Hellenic Industrial Property Organization. His research interests lie on the empirical study of innovation management, intellectual property rights, economic growth and technology transfer.

    Claire Economidou is Professor at the Department of Economics of the University of Piraeus, Greece. She holds a Ph.D. in Economics from the University of Wisconsin-Milwaukee (2004), and her research interests lie on the fields of Economic Growth and Economics of Innovation. More specifically, her current research agenda is mainly concentrated on the knowledge diffusion dynamics and its impact on local innovation and growth perspectives, the role of financial frictions on country’s innovation performance, the assessment of the private value of patents, the role of institutions and social capital in shaping entrepreneurship and innovation, among others.

    Dimitrios Karamanis is a Post-Doc researcher at the Department of Economics at the University of Piraeus, Greece. He holds a M.Sc. of Healthcare Management from Hellenic Open University, a M.Sc. in Data Science from Athens University of Economics and Business, and a B.A. of Economics from Aristotle University of Thessaloniki, Greece. His research interests lie on the areas of Innovation, Entrepreneurship, and Skilled Migration mobility. His research has been financed from a number of prestigious national and European grants.

    Mark Sanders is an Associate Professor at Utrecht School, of Economics, Utrecht University, the Netherlands. He researches and teaches topics that connect entrepreneurship, innovation and the transition towards more sustainable economic growth. His methods are both empirical and theoretical and his teaching is both within the economics department and in courses at the faculty of geosciences and sciences. Mark is also a member of the Sustainable Finance Lab that aims to make financial markets contribute to this transition.

    We are grateful to Alexandra Kechrinioti and Sofia Xesfingi for excellent research assistance. We also thank Miguel Amaral, Alexandros Bechlioulis, Kevin Featherstone, Luca Grili, Magnus Henrekson, Müge Karacal, Dimitris Konstantios, Eleni Kyrkopoulou, Vassilis Monastiriotis and Manolis Tsiritakis as well as seminar participants at the Economics Department Seminar Series of the University of Piraeus, Greece, at the 3rd FIRES conference 2017 Athens, Greece and at the Research Seminar Series of the Hellenic Observatory, London School of Economics, London 2018, UK for useful insights. This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 649378. The paper expresses only the author’s views and the Agency is not responsible for any use that may be made of the information it contains. Part of this paper was completed while Claire Economidou was a visiting fellow at the Hellenic Observatory, European Institute, London School of Economics, London WC2A 2AE. The usual disclaimer applies.

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