Marshall meets Bartik: Revisiting the mysteries of the trade
How talented inventors moving to your city make everyone more creative
When top inventors move into a region, local inventors become significantly more productive — even those who don't work together or share companies. This reveals that innovative ideas spread through the air in ways that can't be fully contained, suggesting that knowledge acts more like weather than property. The researchers found that state tax differences distort where inventive talent concentrates, reshaping innovation patterns across the country.
States and cities compete fiercely to attract top talent through tax breaks and subsidies, betting that star inventors will boost local innovation. This research shows those bets are grounded in real effects — but also reveals a hidden cost: tax-driven clustering means inventive activity ends up in the wrong places, leaving other regions less innovative than they'd naturally be. Understanding these spillovers could help policymakers design smarter incentives that benefit entire regions rather than just chasing individual winners.