Original Paper

Journal of Population Economics

, Volume 27, Issue 2, pp 303-364

First online:

The nexus between labor diversity and firm’s innovation

  • Pierpaolo ParrottaAffiliated withUniversity of LausanneAarhus University
  • , Dario PozzoliAffiliated withAarhus UniversityThe Danish Institute for Regional Government Research (KORA)IZA
  • , Mariola PytlikovaAffiliated withThe Danish Institute for Regional Government Research (KORA)Faculty of Economics, Technical University of Ostrava (VŠB-TU)CReAM Email author 

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In this paper, we investigate the nexus between firm labor diversity and innovation by using data on patent applications filed by firms at the European Patent Office and a linked employer–employee database from Denmark. Exploiting the information retrieved from these comprehensive data sets and implementing proper instrumental variable strategies, we estimate the contribution of workers’ diversity in cultural background, education and demographic characteristics to valuable firm’s innovation activity. Specifically, we find evidence supporting the hypothesis that ethnic diversity may facilitate firms’ patenting activity in several ways by (a) increasing the propensity to (apply for a) patent, (b) increasing the overall number of patent applications, and (c) by enlarging the breadth of patenting technological fields, conditional on patenting. Several robustness checks corroborate the main findings.


Labor diversity Ethnic diversity Patenting activity Extensive and intensive margins

JEL Classifications

J15 J16 J24 J61 J82 O32