Colocation of Production and Innovation: Evidence from the United States*


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Manufacturers perform the majority of US patenting and R&D. The decades-long decline of US manufacturing employment has thus raised concerns that US innovation will fall as well. We investigate the relationship between between physical production and innovation by constructing a new dataset linking all US firms and their establishments to location geocodes and innovative activities. Preliminary results indicate that while firms with both manufacturing and innovation establishments exhibit higher patenting when these facilities are more spatially proximate, manufacturing firms’ overall contribution to US innovation declines steadily and substantially over time. Moreover, we find that cohorts of firms permanently exiting manufacturing in the 1990s and 2000s continue to patent at their prior pace. We thank seminar participants at Dartmouth, Nathan Goldschlag and Shawn Klimek for comments, Emily Greenman for help with the disclosure process, and Alex Schott for research assistance. Any opinions and conclusions expressed herein are those of the authors and do not necessarily represent the views of the US Census Bureau. All results have been reviewed to ensure that no confidential information is disclosed. The Census Bureau’s Disclosure Review Board and Disclosure Avoidance Officers have reviewed this data product for unauthorized disclosure of confidential information and have approved the disclosure avoidance practices applied to this release. DRB Approval Numbers CBDRB-FY20-P1916-R8726 and CBDRB-FY20-P1916-R8756. Tuck School at Dartmouth & CEPR & NBER, email: University of Colorado & CEPR & NBER. Yale School of Management & CEPR & NBER. Penn State University & NBER. Center for Economic Studies US Census Bureau.
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