Last week Alexander Gelber presented on the use of H1-B lottery to measure the impact of the program on firms. Surprisingly, and in contrast to what Bill Kerr and colleagues have found, Gelber saw no increases in innovation or employment with the program.
This week Ross Levine from the Haas School of Business will be presenting, “Insider Trading and Innovation.” Here is the abstract:
This paper assesses whether the enforcement of insider trading laws increases or decreases patent-based measures of technological innovation. Based on about 75,000 industry-country-year observations across 94 economies from 1976 to 2006, we found evidence consistent with the view that enforcing insider trading laws spurs innovation—as measured by patent intensity, scope, impact, generality, and originality—after controlling for country-year and industry-year fixed effects. Consistent with theories of insider trading slowing innovation by impeding the valuation of innovative activities, the relationship between enforcing insider trading laws and innovation is much larger in industries that are naturally innovative and opaque (using the U.S. to benchmark industries).
Ross will be joining the doctoral reading class afterwards, where we will read his paper, “Smart and Illicit: Who Becomes an Entrepreneur and Do They Earn More?“, and Gary King’s recent critique of propensity score matching, “Why Propensity Scores Should Not Be Used for Matching.”