Demographics and Innovation

Are younger labor forces more innovative? The authors attempt to answer this question using the native-born labor force projected based on local historical births in the US. They used three successive levels of analysis to eliminate or examine effects such as firm and inventor life cycles. They also established that innovation activities reflect the innovative characteristics of younger labor forces, and firms in younger labor markets have higher valuations. These results indicate that younger people as a group produce more innovation through the labor supply channel rather than through a financing supply or consumer demand channel. ​