CReAM Seminar - Kirk Doran (Notre Dame)

Abstract: Inventions often economize on labor, so economists have long posited that scarce labor should encourage invention (Hicks,1932). But division of labor and economies of scale require inventions as well, and, given the fixed costs of large establishment sizes, it is plausible that labor and invention can also be complements. To explore this relationship, we provide causal evidence of mass immigration’s effect on invention, using variation induced by 1920s United States immigration quotas, which ended history’s largest international migration. While native workers moved into exposed cities as immigration declined, these workers performed different tasks in different occupations, so the distribution of labor was still changed. We find that inventors in cities exposed to fewer low-skilled immigrants applied for fewer patents. In particular, highly inventive firms with large establishment sizes experienced large declines in invention in the years after the quotas. Labor scarcity affected both the rate and direction of inventive activity.

Location: A1/3 Physics Building