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Given the growing trend toward a knowledge-based economy, it is important for policymakers to understand how the emergence of new technologies affects job creation and the displacement of workers. Melissa Haller The United States Patent and Trademark Office analyzed data on inventors from 110 companies to analyze the relationship between company closures and patent employees, and found that the more productive and well-connected inventors had an easier time rehiring patentees, the more they did. The possibility of movement, contributes to the local brain drain.
In recent decades, the United States, Europe, and other advanced economies have moved toward a knowledge-based economy based on knowledge-based, high-tech industries. A key characteristic of the knowledge economy is its tendency toward creative extinction: when a new technology emerges, it often displaces existing and pre-existing industries. Both firm innovation and firm failure are common phenomena in the knowledge economy. While extensive research has focused on how regions can attract and develop rich technology sectors, less attention has been paid to the potential harmful effects of this economic model. When a large company or factory becomes uncompetitive and closes, job loss is only one of many challenges a city or region faces.
How tight closures affect creators.
I used United States Patent and Trademark Office (USPTO) data from 1976 to 2015 to examine how the failure of a major firm affects patent workers. Patent Information contains detailed information on patents of organizations and inventors, and allows me to search for inventors. As companies and states issue new patents. My final data set contains data from 110 US companies that have either closed, filed for bankruptcy, merged with another firm, or been acquired by another firm, including prominent corporations such as Eastman Kodak, General Motors, and Motorola. While mergers and acquisitions are not always considered “downsizing” in the traditional sense, it’s important to note that these events still represent a significant disruption to the workforce. For example, data indicates that, on average, approximately 30 percent of the existing workforce is considered out of a job as a result of a merger or acquisition event.
I chose to focus on displaced innovators (including those who were fired or voluntarily left a shrinking organization) for a few reasons: First, innovators are the scientists, engineers, and researchers who produce new inventions and technologies within companies and other organizations. . With more workers pursuing STEM degrees or working in technical careers than ever before, this research is relevant to a growing segment of the global workforce. Second, as the production of new technologies becomes increasingly associated with regional economic prosperity, the movement of displaced innovators becomes a major consideration for regional policy makers.
Figure 1 shows the geographic distribution of inventors across all U.S. regions or core statistical areas (CBSAs) in my sample. The first panel shows that the inventors are concentrated primarily in major cities in the Northeast, Midwest, and Southwest United States. However, the success rate of inventors after displacement varies by region: in some regions, up to 70 percent of inventors re-patent, while in other regions only 20 percent of inventors re-patent. Inventors who are not rehired for a patent may retire or switch to a non-patenting career. Many innovators move to new cities or regions after being displaced from a declining organization; As the second panel shows, cities in the Northeast and Midwest regions (largely known as America’s former industrial belt region) show the largest losses of innovators in the sample.
Figure 1 – Mobility of inventors and inventors by core-specific statistical area, 1976-2015
Using a regression model, I examine the individual and regional characteristics that influence innovators’ career outcomes. While more productive and well-connected innovators have an easier time rehiring their franchisees, they are also more likely to move to a new city after being displaced by a shrinking organization. At the regional level, inventors are more likely to re-invent patents in cities with a higher proportion of technologically diverse firms. Creative opportunities in the technology field that are related to and unrelated to an innovator’s existing skills increase the likelihood of reemployment. While cities with related technological diversity may have more employment opportunities that are strongly related to innovation skills, cities with unrelated technological diversity may have stronger employment opportunities in different industries.
Photo by Desola Lanre-Ologun on Unsplash
Mobility, displacement and policy
What do these findings mean for policy makers? First, it shows that some high-tech workers may struggle more than others after being displaced. Less experienced or less productive innovators, those with poor networking and specialized skills may face more challenges. In addition, creators who are unable or unwilling to move after displacement may find less employment opportunities, especially in regions with less diverse economies. These employees may need more resume help than others.
Additionally, my work shows that the most skilled and effective innovators often move on after leaving a declining organization. This “brain drain” can deprive regions of valuable skills and human resources. This loss may be particularly severe in small or specialized US regions, although more work is needed to better understand the complex and uneven effects of brain drain and labor mobility on regional economies. Programs focused on retaining skilled workers or retraining and developing inactive local workers can help offset these losses.
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Note: This article represents the views of the author and not the position of USAPP – American Politics and Policy or the London School of Economics.
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About the author
Melissa Haller – Binghamton University
Melissa Haller is a lecturer and coordinator of the Digital and Data Studies Program at Binghamton University, where she teaches in the Geography Department. Trained as an economic geographer, Melissa is interested in understanding economic change, recession and resilience. Her recent work focuses on how workers, regions, and innovation are affected and disrupted by major shutdowns.
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