SPATIAL LABOR MARKETS AND TECHNOLOGYSPILLOVERS - ANALYSIS FROM THE USMIDWEST

The primary focus of this paper is the impact of knowledge creation and innovative activity onnon-farm employment growth. Non-farm employment growth is modeled in a stylized modelwhere new knowledge and local economic externalities are key factors driving technologygrowth. For our empirical application we assume that new knowledge and innovative activity areembodied in new patent filings within the county. To explicitly capture spillovers betweencounties we apply spatial econometric techniques. The econometric model, based on a 2-stagespatial econometric estimation procedure, is tested for all counties in US Midwestern States ofIowa, Minnesota, Missouri, Kansas, Nebraska, South Dakota and North Dakota. The resultsindicate the positive influence of knowledge creation and innovative activity, as captured bypatents, on non-farm employment growth during the period 1969-2000. We also find strongevidence of local spatial employment growth spillovers contributing in a positive manner toexplaining non-farm employment growth. The key results also hold when we consider subsamplesof the study period suggesting our model is quite robust to the time period of analysis.[...]