State Incentives for Innovation, Star Scientists and Jobs: Evidence from Biotech

Enrico Moretti and Daniel Wilson

No 19294, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We evaluate the effects of state-provided financial incentives for biotech companies, which are part of a growing trend of placed-based policies designed to spur innovation clusters. We estimate that the adoption of subsidies for biotech employers by a state raises the number of star biotech scientists in that state by about 15 percent over a three year period. A 10% decline in the user cost of capital induced by an increase in R&D tax incentives raises the number of stars by 22%. Most of the gains are due to the relocation of star scientist to adopting states, with limited effect on the productivity of incumbent scientists already in the state. The gains are concentrated among private sector inventors. We uncover little effect of subsidies on academic researchers, consistent with the fact that their incentives are unaffected. Our estimates indicate that the effect on overall employment in the biotech sector is of comparable magnitude to that on star scientists. Consistent with a model where workers are fairly mobile across states, we find limited effects on salaries in the industry. We uncover large effects on employment in the non-traded sector due to a sizable multiplier effect, with the largest impact on employment in construction and retail. Finally, we find mixed evidence of a displacement effect on states that are geographically close, or states that economically close as measured by migration flows.

JEL-codes: H0 J0 R0 (search for similar items in EconPapers)
Date: 2013-08
New Economics Papers: this item is included in nep-cdm, nep-ino, nep-sog and nep-ure
Note: LS PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Published as Moretti, Enrico & Wilson, Daniel J., 2014. "State incentives for innovation, star scientists and jobs: Evidence from biotech," Journal of Urban Economics, Elsevier, vol. 79(C), pages 20-38.

Downloads: (external link)
http://www.nber.org/papers/w19294.pdf (application/pdf)

Related works:
Journal Article: State incentives for innovation, star scientists and jobs: Evidence from biotech (2014)
Working Paper: State Incentives for Innovation, Star Scientists and Jobs: Evidence from Biotech (2013)
Working Paper: State Incentives for Innovation, Star Scientists and Jobs: Evidence from Biotech (2013)
Working Paper: State Incentives for Innovation, Star Scientists and Jobs: Evidence from Biotech (2013)
Working Paper: State Incentives for Innovation, Star Scientists, and Jobs: Evidence from Biotech (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:19294

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w19294

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().