Age, Human Capital and the Geography of Innovation

An aging labor force is often associated with a decreasing innovative performance on aggregate, firm or individual level. Using a regional knowledge production function to explain patenting activity in German districts, we propose to include the effect of age in a twofold specification: First, we account indirectly for age by including the aggregate, age-heterogeneous human capital available in each district and estimating its effect on patenting performance. Second, we assume that there is an age effect that is independent of human capital and therefore include the age structure of the districts' labor force directly, too. Possible explanations for an independent age-effect are age-dependent differences in the ability to exploit innovation-relevant human capital or age-specific motivation to lead creative ideas to successful inventions. Departing from these conceptualizations provided by economics and I-O psychology, we estimate a negative binomial regression model appropriate for count data. Results on German district level indicate that engineering knowledge in the younger as well as the prime age group significantly enhances patenting performance, whereas we do not find any efect for the age group 50+. However, for older ages, the stock of experience has a positive influence. On aggregate level, we find a positive independent age effect.