Labour mobility as a mechanism of spillovers and creative destruction [Completed]

The aim of the project is to understand the role of labor mobility as a mechanism that permits knowledge spillovers and creative destruction and, consequently, its importance for productivity growth in the Finnish industries. In addition to the implications of labor mobility, we examine its determinants and facilitating factors. The focus is on the policy implications.

Clearly, productivity-enhancing diffusion of knowledge includes also mechanisms other than labor flows. It may concern knowledge embodied into capital or intermediate inputs or “disembodied” technological knowledge. However, other types of mechanisms may not necessarily involve such market failures that a) call for policy interventions or b) that can effectively be dealt with in a globalized market environment where intangible assets (and their returns) may easily flow across the borders of national economies as a result of mergers and acquisitions.

The project aims to extend our earlier analysis on innovation, labor mobility, creative destruction and industry productivity growth in various ways.
The focus is now more on considering how innovation system as a whole and its main policy tools affect creative destruction and industry productivity growth, not only directly but also indirectly through spillovers and creative destruction.

The purpose is to provide a comprehensive and detailed documentation of labor flows in the context of the Finnish innovation system. This descriptive analysis makes also use of productivity decompositions that provide a rich account of micro-level sources of industry productivity. As an extension to the earlier studies, we pay attention to how different firm groups contribute to different mechanisms behind aggregate productivity growth. We will strive for illustrative presentation of the results, for example by extensive use of visualization of the results.

External participants: Jesper Bagger (Royal Holloway, University of London), Satu Nurmi (Statistics Finland)

Starting year: 2014
Year of completion: 2016
Person in charge: Maliranta, Mika
Määttänen, Niku
Koski, Heli
Pajarinen, Mika
Funding: Tekes