Does skilled migration foster innovative performance? Evidence from British local areas

Abstract

What is the effect of an increase in the stock of human capital due to skilled immigration on the innovative performance of recipient economies? Combining firm-level micro-data with area-level labour force information, this paper investigates the impact of skilled international migration inflows on firms' product and process innovation in British local labour market areas. The paper supports the evidence in favour of a causal link between immigration and innovation. Results also show that the nature of the innovative process and the typology of innovative activities performed by local firms play a key role in the relation between immigration and innovation.