), allows for causal interpretation of the relationship between innovation output and labor productivity. We find that knowledge …A rich literature links knowledge inputs with innovative outputs. However, most of what is known is restricted to … productivity - hold for knowledge intensive services. Combining the models of Crepon et al. (1998) and of Ackerberg et al. (2015 …

firms having a higher probability of initiating innovation activities and of successfully turning knowledge into innovation … activities—R&D, innovative output, and productivity—hold for knowledge-intensive services. With especially high start-up rates … and the majority of employees in microfirms, knowledge-intensive services (KIS) have a starkly different profile from …