Essays in the Economics of Innovation

Innovation is a crucial determinant of long-run economic growth in advanced economies. This dissertation explores the economic and social determinants of the production and diffusion of innovation in the context of Europe and the United States in the late nineteenth and early twentieth century. The first chapter (jointly authored with Gaia Dossi) documents how out-migration impacts innovation in the country of origin of migrants. During the Age of Mass Migration, nearly four million English migrants settled in the US. We construct a novel individual-level dataset linking English immigrants in the US to the UK census and complement it with the newly digitized universe of UK patents. Using a new shift-share instrument for bilateral migration flows and a triple-differences design, we document a positive, significant, and persistent effect of exposure to US technology through migrant ties on the direction of innovation in Britain in 1870--1940. The individual-level analysis suggests that physical return migration is not the main factor underlying this ``return innovation'' effect. Instead, we find that migration ties generate information flows that facilitate the cross-border diffusion of novel knowledge. Furthermore, our findings suggest that market integration fostered by migration linkages is a crucial driver of information flows. The second chapter (jointly authored with Lorenzo Spadavecchia) interprets out-migration through the lenses of directed technical change and adoption theory. We study the impact of immigration restriction policies on technology adoption in countries sending migrants. Between 1920 and 1921, the number of Italian immigrants to the United States dropped by 85\% after Congress passed the Emergency Quota Act, a severely restrictive immigration law. In a difference-in-differences setting, we exploit variation in exposure across Italian districts to this massive restriction against human mobility. Using novel individual-level data on Italian immigrants to the US and newly digitized historical censuses, we show that this policy substantially hampered technology adoption and capital investment. We interpret this as evidence of directed technical adoption: an increase in the labor supply dampens the incentive for firms to adopt labor-saving technologies. To validate this mechanism, we show that more exposed districts display a sizable increase in overall population and employment in manufacturing. We provide evidence that ``missing migrants,'' whose migration was inhibited by the Act, drive this result. The third chapter (jointly authored with Enrico Berkes, Gaia Dossi, and Mara P. Squicciarini) investigates how societies respond to adversity. After a negative shock, separate strands of research document either an increase in religiosity or a boost in innovation efforts. In this paper, we show that both reactions can occur at the same time, driven by different individuals within the society. The setting of our study is 1918--1919 influenza pandemic in the United States. To measure religiosity, we construct a novel indicator based on the naming patterns of newborns. We measure innovation through the universe of granted patents. Exploiting plausibly exogenous county-level variation in exposure to the pandemic, we provide evidence that more-affected counties become both more religious and more innovative. Looking within counties, we uncover heterogeneous responses: individuals from more religious backgrounds further embrace religion, while those from less religious backgrounds become more likely to choose a scientific occupation. Facing adversity widens the distance in religiosity between science-oriented individuals and the rest of the population, and it increases the polarization of religious beliefs.