Demographics and Innovation -- Younger populations are more innovative

Derrien, François and Kecskes, Ambrus and Nguyen, Phuong-Anh, Demographics and Innovation (December 11, 2017). HEC Paris Research Paper No. FIN-2017-1243. Available at SSRN: https://ssrn.com/abstract=3076971

Abstract: We argue that a younger labor force produces more innovation. Using the native born labor force projected based on local historical births, we find that a younger age structure causes a significant increase in innovation. We use three levels of analysis in succession – commuting zones, firms, and inventors – to examine or eliminate various effects such as firm and inventor life cycles. We also find that innovation activities reflect the innovative characteristics of younger labor forces. Our results indicate that demographics increase innovation through the labor supply channel rather than through a financing supply or consumer demand channel.

Keywords: Innovation; Demographics; Age structure; Labor markets; Firms; Inventors; Patents