Creative and science oriented employees and firm innovation : a key for smarter cities?

This paper examines the link between the endowment of creative and science based STEM - Science, Technology, Engineering and Mathematics - workers and the level of the firm and firm- and city-/regional-level innovation in Germany. It also looks into whether the presence of these two groups of workers has greater benefits for larger cities than smaller locations, thus justifying policies to attract these workers in order to make German cities "smarter". The empirical analysis is based on a probit estimation, covering 115,000 plant-level observations between 1998 and 2015. The results highlight that firms that employ creative and STEM workers are more innovative than those that do not. However, the positive connection of creative workers to innovation is limited to the boundaries of the firm, whereas that of STEM workers is as associated to the generation of considerable innovation spillovers. Hence, attracting STEM workers is more likely to end up making German cities smarter than focusing exclusively on creative workers.