Working Paper: NBER ID: w20921
Authors: Mikko Packalen; Jay Bhattacharya
Abstract: Faster technological progress has long been considered a key potential benefit of agglomeration. Physical proximity to others may help inventors adopt new ideas in their work by increasing awareness about which new ideas exist and by enhancing understanding of the properties and usefulness of new ideas through a vigorous debate on the ideas' merits (Marshall, 1920). We test a key empirical prediction of this theory: that inventions in large cities build on newer ideas than inventions in smaller cities. We analyze the idea inputs of nearly every US patent granted during 1836–2010. We find that a larger city size provided a considerable advantage in inventive activities during most of the 20th century but that in recent decades this advantage has eroded.
Keywords: No keywords provided
JEL Codes: O18; O31; O32; O33; R12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| advancements in communication technologies (L96) | weakening of agglomeration's impact on innovation (O36) |
| collaboration among inventors (O36) | adoption of newer ideas (O35) |
| city size (population density) (R12) | adoption of new ideas in inventions (O35) |
| larger cities (R12) | likelihood of using newer ideas (O36) |
| agglomeration (R11) | use of new ideas in invention (O36) |