Is workers' mobility a source of R&D spillovers? Evidence of effects of innovative activities on wages

Purpose - This study asks whether working in a R&D intensive industry affects a worker's wage profile. If R&D investment translates into transferable human capital or knowledge, workers' mobility constitutes a negative externality from the point of view of the firm/industry that bears the cost of R&D activities. A steepening of the wage profile would address such externality. Design/methodology/approach - Using PSID data combined with US BEA data on US manufacturing industries' R&D intensities between 1981 and 1992, regression analysis is used to explore the hypothesis that, similarly to general training, industry R&D steepens a worker's wage-experience profile. Findings - In general the evidence is mixed. The results obtained from biennial wage growth regressions support to some extent the hypothesis that exposure to R&D activities allows a specific group of workers to accumulate general human capital for which they pay a positive price in early stages of their career. Research limitation/implications - An important caveat applies to the results. Unlike previous research by Møen who uses firm level R&D, the results found in this study are generated by using industry level R&D, which, being possibly affected by severe measurement errors, may bias the estimated coefficients towards zero. Originality/value - This study complements Møen's evidence based on Norwegian wages with the effects of industry-specific R&D intensities on the earnings profile in US manufacturing industries. By investigating whether industry R&D affects the return to experience and/or to tenure this study addresses an overlooked issue of which type of skills R&D allows workers to accumulate.