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Marshall meets Bartik: Revisiting the mysteries of the trade

Author

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  • Yasusada Murata

    (College of Economics, Nihon University)

  • Ryo Nakajima

    (Department of Economics, Keio University)

Abstract

We identify a causal effect of top inventor inflows on the patent productivity of local inventors by combining the idea-generating process described by Marshall (1890) with the Bartik (1991) instruments involving the state taxes and commuting zone characteristics of the United States. We find that local productivity gains go beyond organizational boundaries and co-inventor relationships, which implies the partially nonexcludable good nature of knowledge in a spatial economy and pertains to the mysteries of the trade in the air. Our counterfactual experiment suggests that the spatial distribution of inventive activity is substantially distorted by the presence of heterogeneity in state taxes.

Suggested Citation

  • Yasusada Murata & Ryo Nakajima, 2025. "Marshall meets Bartik: Revisiting the mysteries of the trade," Keio-IES Discussion Paper Series 2025-005, Institute for Economics Studies, Keio University.
    • Handle: RePEc:keo:dpaper:2025-005
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    Keywords

    patent productivity; inventor migration; knowledge spillovers; knowledge sharing; Bartik instruments; mysteries of the trade; idea-generating process;
    All these keywords.

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation

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