The nexus between labour mobility and innovation: an empirical analysis

Abstract

Labour mobility is a crucial feature of human nature and an effective medium of knowledge transfer. As the workers shift from one region to another, their embodied skills travel with them, and the diversities of skills make complementarities of ideas that encourage new methods of production or innovation in the destination. Further innovation boosts economic growth and smoothens the mobility path. In this way, a virtuous cycle takes place between migration and innovation, which has not been comprehensively explored in the existing literature. Especially in developing nations, such studies are a handful in number and are not at a consensus to derive the normative conclusion. As the relationship between migration and innovation has remained inconclusive due to the variation of skills and endowments, the study aims to investigate the migration-innovation nexus critically. The study explores the varied ways in which migration influences and is influenced by innovation. The empirical investigation employs panel dataset of migration and innovation, extracted from the World Development Indicators (WDI), from 2005 to 2015, utilizing a system-GMM estimation model to account for endogeneity issues. Results reveal a positive and significant influence of international migration on patenting output, with varied time lags and with variation across geographical regions, patenting and migrant receiving country clusters. Further, the study contributes valuable insights into complex dynamics and virtuous cycle of migration and innovation, which is appreciable for economic growth and development. © The Author(s) under exclusive licence to Associazione Amici di Economia e Politica Industriale 2024.