Does Labour Mobility Foster Innovation? Evidence from Sweden

By utilising a Swedish unique, matched employer-employee dataset that has been pooled with firm-level patent application data, we provide new evidence that knowledge workers’ mobility has a positive and strongly significant impact on firm innovation output, as measured by firm patent applications. The effect is particularly strong for knowledge workers that have previously worked in a patenting firm (the learning-by-hiring effect), but firms losing a knowledge worker are also shown to benefit (the diaspora effect), albeit more weakly. Finally, the effect is more pronounced when the joining worker originates in another region.