Labor Market Frictions for Female Workers and Corporate Innovation

Abstract

I investigate the impact of labor market frictions for female workers on corporate innovation. Following the adoption of state-level paid family leave acts, which exogenously facilitate labor market participation of female inventors, firms headquartered in affected states show significant increases in their innovation relative to unaffected firms. This effect is stronger for firms in innovative industries, reliant on a skilled workforce, belonging to industries with lower labor mobility, in less tight local labor markets, and with lower female employment. Further, the adoption of paid family leave acts raises both the number of female inventors in a state and the amount of patents developed by teams with female inventors. Also, it leads to an inflow of inventors to affected states. Overall, my results imply that labor market frictions for working mothers inhibit corporate innovation.