Corrected event study reveals null effects on patenting from technology clusters, suggesting reported elasticity may not be causal.
Moretti (2021) reports a positive elasticity between technology cluster size and patenting, and uses an event study and instrumental variables regressions to justify a causal interpretation. The event study does not use the variation generated by inventors moving across cities, and the instrument is constructed incorrectly due to a coding error. I run a corrected event study and fix the coding error, and find null effects. The reported elasticity may not be causal. (JEL J24, L60, O31, O34, R32)
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Michael Wiebe (2026) studied this question.
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