Mobility of skilled workers and co-invention networks: an anatomy of localized knowledge flows

This article illustrates the contribution of mobile inventors and networks of inventors to diffusion of knowledge across firms and within cities or states. It is based upon an data set on US inventors’ patent applications at the European Patent Office, the fields of drugs, biotechnology and organic chemistry. The study combines the originally proposed by Jaffe et al. (1993, Quarterly Journal of Economics, 108: 577–598) with tools from social network analysis, in order to evaluate extent of localization of knowledge flows, as measured by patent citations. After controlling inventors’ mobility and for the resulting co-invention network, the residual effect of proximity on knowledge diffusion is found to be greatly reduced. We argue that most fundamental reason why geography matters in constraining the diffusion of is that mobile researchers are not likely to relocate in space, so that their -invention network is also localized. In the light of these results, we revisit common of localized knowledge flows as externalities.