Agglomeration and Innovation

Gerald Carlino, William R. Kerr

NBER Working Paper No. 20367
Issued in August 2014
NBER Program(s):Industrial Organization, Labor Studies, Productivity, Innovation, and Entrepreneurship

This chapter reviews academic research on the connections between agglomeration and innovation. We first describe the conceptual distinctions between invention and innovation. We then describe how these factors are frequently measured in the data and some resulting empirical regularities. Innovative activity tends to be more concentrated than industrial activity, and we discuss important findings from the literature about why this is so. We highlight the traits of cities (e.g., size, industrial diversity) that theoretical and empirical work link to innovation, and we discuss factors that help sustain these features (e.g., the localization of entrepreneurial finance).

Acknowledgments

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Document Object Identifier (DOI): 10.3386/w20367

Published: Gerald Carlino, William R. Kerr, Chapter 6 - Agglomeration and Innovation, Editor(s): Gilles Duranton, J. Vernon Henderson, William C. Strange, Handbook of Regional and Urban Economics, Elsevier, Volume 5, 2015, Pages 349-404, ISSN 1574-0080, ISBN 9780444595331, https://doi.org/10.1016/B978-0-444-59517-1.00006-4.

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