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Mary Riddel and R. Keith Schwer |
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Regional Innovative Capacity with Endogenous Employment: Empirical Evidence from the U.S. |
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The Review of Regional Studies 2003 33(1): 73-84.
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Abstract:
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Using the endogenous growth model proposed by Romer (1990) and operationalized by Stern,
Porter, and Furman (2000), we seek to identify factors that affect innovative capacity in the U.S.
We find strong evidence of endogeneity between employment growth and innovative capacity.
In response, we estimate a generalized two-stage random effects model of hi-tech employment
and patenting activity. We find that the stock of knowledge (standing on shoulders effect),
industry R&D expenditures, and the number of high-tech employees explain the rate of change
of innovation among the states during the 1990s. The stock of human capital also influences the
innovation rate. Our findings suggest that patenting activity and wages in the high-tech sector are
the primary forces influencing the demand for high-tech labor.
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