The chicken-and-egg problem between localized knowledge spillovers and thespatial concentration of inventive activities makes it difficult to identify how proximity affects knowledge spillovers. Using sudden changes in travel time following the introduction of new flight routes, we identify that...

This paper studies the causal relationship between proximity and knowledge diffusion by exploiting sudden changes in travel time following the introduction of new flight routes. We find that decreasing travel time between U.S. cities by 20% increases knowledge flow by 0.5%, which corresponds to...