Education Makes Distance Disappear

A STUDY BY MYRIAM MARIANI WITH PAOLA GIURI SHOWS THAT THE MOST EDUCATED INVENTORS CAN EXPLOIT KNOWLEDGE WHEREVER PRODUCED, WHILE THE OTHERS HAVE TO RELY ON THEIR LOCAL NETWORKS

A lively debate involves whether the transmission and absorption of knowledge spillovers -- that is, non–market-mediated knowledge interactions among individuals -- are sensitive to geographical distance. Existing contributions maintain that geographical proximity fosters unplanned interactions and face-to-face contacts and therefore reduces the effort needed to recognize and absorb useful knowledge.

The article When Distance Disappears: Inventors, Education, and The Locus Of Knowledge Spillovers by Myriam Mariani (Department of Management and Technology) and Paola Giuri (Università di Bologna), forthcoming on the Review of Economics and Statistics (doi:10.1162/REST_a_00259) studies the role of education in shaping the geographical breadth of knowledge spillovers.

The empirical analysis employs individual level data provided by the inventors of 6,051 European patents (PatVal-EU survey), including information on age, level of education, and the use of other means that shape access to knowledge spillovers with varying geographical coverage. As an indicator of knowledge spillovers, the article uses the inventor’s use of interactions, such as meetings, discussions, and circulation of ideas, to pursue research that leads to a patented invention. The authors find that education contributes to the capacity to scout for, absorb and exploit knowledge spillovers, irrespective of whether the sources of these spillovers are geographically near or far. After controlling for this better ability to absorb knowledge spillovers regardless of their geographic origins, the article shows that education also facilitates the use of geographically distant knowledge spillovers, which may even substitute for those available locally.

The findings of this research suggest that the ability to absorb knowledge spillovers and be “cosmopolitan” in accessing them is also an individual factor, to which a high level of education contributes, because it provides people with the ability to recognize the value of, assimilate, and exploit knowledge, with less need for physical proximity or face-to-face contacts. Reliance on local spillovers remains a better option for inventors who lack the capacity to move beyond their regional setting, therefore reducing the potential pool of knowledge spillovers to develop new ideas. Existing contributions indicate a positive correlation between education and the economic performance of firms and countries, and note the direction of causation from education, through spillovers, to economic growth and productivity.

The micro-level evidence provided by this paper suggests that one possible mechanism underlying this link is that education contributes to individual cognitive capabilities to scout for and absorb knowledge spillovers, across distance and contexts, which enlarges the pool and expected quality of inputs people receive to develop new ideas. 

by Martina Pasquini